Financial services companies are coming to the market with simplified mobile banking (m-banking) offerings in the hope of igniting growth in a market that has failed to live up to expectations.
MTN Banking, Wizzit and First National Bank (FNB) have in the past year all launched m-banking applications that are geared towards the needs of unbanked users who have access to cellphones.
In contrast to solutions of the past such as the flashy wireless application protocol (Wap) and wireless Internet gateway (Wig), the new services represent a return to basic interfaces such as voice and SMS.
Two factors are driving the new approach to m-banking. They are disappointment at the adoption of the mobile channel among existing banking customers and a desire to tap into SA's vast unbanked and underbanked population.
There were only 160 000 registered m-banking users in SA compared with about 1,4m Internet banking users by early 2005, according to BMI-TechKnowledge's (BMI-T's) Multi-Channel Banking study, released earlier this year. Most banks report that only a small percentage of registered m-banking users use the channel.
Adoption rates of m-banking is especially disappointing, considering that there are about 18m-20m cellphones in the country compared with about 4m Internet-connected PCs.
BMI-T cites poor bandwidth, the limitations of the cellphone interface and the complexity of m-banking applications as the main reasons for poor adoption rates.
Another study by World Wide Worx found that only 13% of respondents in a nationally representative group had tried cellphone banking.
However, two-thirds of those with bank accounts (87% of the sample) believed that cellphone banking was convenient, which suggests that growth may increase.
"If you look at the total number of active cellphone banking users in the country - the people who are logging in, moving money, transacting - m-banking has been a failure," says Herman Singh, director of technology engineering at Standard Bank.
"The passive stuff - such as SMS alerts when a transaction goes through an account - have, however, been successful."
According to Finmark Trust, there are 14m-16m people in the unbanked and underbanked market in SA. Banks need to tap into this segment of the population to grow their customer bases and revenue, and to meet the universal access requirements of the Financial Sector Charter.
Many of these people live in remote, rural areas with poor access to bank branches and ATMs, yet many of them own cellphones.
Wizzit and MTN Banking have already signed up thousands of new customers in the few months since they launched.
Many of these customers are new to the formal banking sector.
FNB launched a new SMS-based service earlier this year to bring m-banking within the reach of customers who do not have the latest cellphones and Sim cards. Since then more than 90 000 customers have signed on for the service.
The service allows customers to buy prepaid airtime from all three cellular networks for themselves or someone else; check account balances and ministatements; and transfer money between their own FNB accounts. A recent enhancement allows users to make third-party payments.
Improvements in the interfaces used for m-banking coupled with richer functionality and more aggressive marketing are likely to drive further growth in SA's m-banking market over the next few months, says Hannes van Rensburg, CEO at Fundamo, the company that supplied the core banking application that powers MTN Banking.
He points out that m-banks such as MTN Banking offer rich functionality that is not available in any other channel, providing more incentive for users to sign up. For example, MTN Banking clients can use their cellphones to activate and deactivate their bank cards at will.
They can also use their handsets to verify a transaction at a point of sale by replying to an SMS notification.
Banks and handset vendors believe that mobile Internet-based offerings such as Wap will have an important part to play in the high-end market in the short term and across the board within the next three to five years.
"The first generation of Wap was a failure because calls were metered by the minute and connections were slow," says Singh.
"These problems have largely been sorted out.
"High-speed, packet-based cellular network technologies such as GPRS, Edge and 3G allow users to pay for the data they transfer rather than the time they spend online."
Standard Bank is looking to build a Wap solution that caters to the needs of high-end consumers. The idea will be to build an interface that is as reliable and easy to use as one of the bank's ATMs, says Singh.
"Less than 15% of the phones in the country are Wap-enabled and less than 5% are GPRS-enabled.
For this to work, customers will need Wap and GPRS, which means the service will initially be only for top-end consumers," he says.
As GPRS-, Edge- and 3G-ready phones with colour screens start to penetrate the market, banks will be able to offer richer mobile banking services that compare favourably with the features and experience offered by Internet banking, says Stephen Nolan, country manager at Motorola Southern Africa. About 80% of the handsets that Motorola is shipping into SA at the moment are GPRS-enabled, he says.
