Clicks Replace Bricks as Cellphone, Internet Banking Ring the Changes in South Africa
Every one of the big four banks has said in the past month that electronic banking channels are growing fast and, while they have yet to make a significant contribution to group profit, First National Bank (FNB) announced yesterday volumes through its cellphone banking service are growing more than 100% year on year.
"It took FNB's cellphone banking nine months to reach the 289,000 transactions per month mark. The new cellphone banking service was able to attract more than 117,000 active customers in 72 days ," CE Michael Jordaan said last week.
During parent FirstRand's results presentation on Tuesday, Jordaan said cellphone transactions had grown 133% in the year to June. More traditional lines of banking, such as credit card transactions, had grown 9% in the year. Standard Bank said last month its Internet user numbers had risen 19% but did not give mobile figures.
Louis von Zeuner, head of retail banking at Absa, said in the six months to June his company's mobile banking business had grown 86%, with a million of Absa's customers using the internet.
Absa, like FNB, was keen to capitalise on the growth in this segment of the market. Gartner, the US-based technology research company, said in its view of the future that "mobile and wireless technologies must be at the strategic heart of every organisation's IT plans".
"As these technologies proliferate and mature, they will bring new consumer and business applications to more places and devices." One of the main benefits of the rise in mobile banking is that it shifts customers away from using bank branches.
"Imagine how many branches we would have to build if there wasn't internet or cellphone banking," Len Pienaar, CE of FNB Mobile Transact, said yesterday.
Apart from this obvious benefit, cellphone banking was helping FNB to retain clients and decrease fraud significantly. Pienaar said while customers would pay for the SMS cost when retrieving a balance or a mini-statement, making a payment or purchasing airtime on their cellphones, FNB was not charging fees for the transactions.
He said the bank made money from the retail sales of airtime and that the cost of dealing with a customer over a cellphone was "a fraction of the cost of that person going into a branch".
FNB made R1bn in sales over cellphones in the past fiscal year. Pienaar said 80% of its customers were transacting electronically and there were 10 times as many cellphone customers as there were internet customers. "We can serve 6-million customers for the cost of one branch," Pienaar said. "We make more money than home loans right now." However, that statement might be less impressive than it sounds.
At FirstRand's results presentation this week, Jordaan showed consumer bad debts had risen from 0,93% to 2% in a year thanks to the fact that people were struggling to pay off their mortgages.
Balancing Act’s M-Money - Finances, Banking and Payments through mobile phones can be ordered by clicking on: http://www.balancingact-africa.com/publications.html
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