By Richard Stovin-Bradford
Picture the domestic worker who catches a taxi from her township to the nearest bank — or from a rural settlement to the nearest town — to check whether her social grant or salary has been paid.
It is a busy Saturday morning, so she queues first for a taxi then again at the bank. Her indirect bank charges are high: she has to pay a fare just to get to the bank.
On the way home in the taxi, she takes a call on her cellphone. It never strikes her that she could be one of the growing number of South Africans who use their cellphone to check their balance or pay bills — in a matter of seconds — for a relatively low cost.
Banks have spent millions on ATMs and portable branches to fulfil their financial sector charter commitments to put banking within reach of all South Africans — especially those in the lower income groups. But cellphone banking is probably the most life-transforming — yet overlooked — bank service available.
Nedbank retail chief Rob Shuter says: “Adoption of cellphone banking has been a little slow, but it’s going to grow enormously over the next few years.”
Wizzit CEO Brian Richardson, whose cellphone bank concentrates on providing transactional banking to the previously unbanked, mainly in rural areas, said: “We’re confident that mobile banking will be the next major wave in the payment space.”
Wizzit has an avowed transformational focus. Richardson said: “Wizzit is trying to use mobile technology to address the three A’s of the approximately 11million unbanked people in South Africa: affordability, accessibility and availability.”
Len Pienaar, FNB’s chief executive of “mobile and transact”, said: “Banks have effectively given customers a bank in their hands. It’s the biggest opportunity for banks since the Internet.”
Christo Vrey, his Absa counterpart, says it will become second nature, like Internet banking before it.
All this is music to the ears of Mark Napier, CEO of the FinMark Trust, and long an evangelist for cellphone banking.
He said: “The utility for existing bank customers is obvious, but mobile banking is of huge benefit to those with no account.”
As an extra channel for an existing bank, cellphone banking was a useful add-on, he said, but the economics were different for a company providing cellphone banking only.
The big four banks and Investec offer it as an additional channel whereas for Wizzit and MTN Banking, cellphone banking is their sole business.
The FinScope 2007 survey for FinMark Trust, an independent “catalyst for change in financial markets”, shows that 60% of South Africans older than 16 have a bank account, and 66% of them have a cellphone.
But only 4% use their cellphone for banking, despite a massive 84% of them being happy to contact others by SMS, the most common cellphone banking system.
Why do so few use their handsets to do their banking? Bankers put it down to insufficient consumer education and confidence.
Clients need to know that it is safe and comparatively cheap — or, in some cases free — to use.
Shuter said: “We offer SMS banking to all of our clients, whether they have an Mzansi, consumer, Go Banking or private bank account, regardless of network and of whether they are on contract or pre-paid.”
Absa’s cellphone banking head Christo Vrey says banks must show consumers that handsets are an important financial tool. Over 500000 Absa customers have registered for cellphone banking and about 50000 small-business customers transact almost entirely on their cellphones. Vrey expects one million of Absa’s 9.2million clients to be on mobile banking next year.
FNB has more than 500000 registered cellphone banking customers — nearly 300000 of them active — who notch up R300-million in transactions a month.
Nedbank has more than 70500 cellphone banking customers, and Standard Bank more than 100000.
Pienaar is surprised by the pace of take- up. He said: “When we launched cellphone banking three years ago, we thought it would be a secondary channel. We never expected to see the growth we’ve seen. Now it’s a primary channel.”
For the growth trend to continue, Charles Street, the head of Standard Bank’s mobile channel, said consumers who were used to banking at branches, ATMs and on the Internet, needed to know it was safe to transact on their cellphone.
That requires only a short voyage of discovery. Street said: “In the past 12-18 months we’ve seen confidence grow as clients progress from balance inquiries to making their first payments.”
New technologies consultancy World Wide Worx research shows balance inquiries account for 89.1% of usage, followed by mini-statements (55.4%), transfers (54.9%), account payments (40%) and airtime purchases (37.7%).
World Wide Worx consultant Arthur Goldstuck said: “Once you are a mobile banker, you know it is easy and secure.”
Cost should not be an issue. Most banks want to encourage take-up of SMS banking and keep costs low. FNB and Nedbank offer SMS banking as a free service for now.
It is not just younger users who are giving the service a go. Pienaar says: “Our best customers are typically 35 years old, so our cellphone banking profile is beginning to look like our normal banking profile. It’s used by a cross-section of customers.”
But Street said: “We’ve seen a changing pattern in the lower to middle market, especially among younger users who already use cellphones to download ringtones and search on Google. They’re happy to bank using their cellphones.”
Security is a concern for bankers, whose biggest headache is with customers who do not keep their profile and PIN details secret.
Mainstream retailers have not rushed to establish pay points for customers wishing to pay by phone, because swiping a card is generally easier. However cellphone payments are likely to be popular in spazas, where the owner cannot afford a point-of- sale device.