Using technology
to bank Africa
Lessons
Yolande van Wyk
Head: Strategic Projects
FNB Mobile and Transact Solutions
Page 1 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Topics
•
A look at GSM and why it’s so successful in Africa
•
Technologies typically available for mobile banking
•
Typical business models for mobile banking
•
A quick look at banking in Africa
•
Mobile banking in Africa
•
Other barriers to rolling out a successful solution
•
Our lessons
Page 2 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Excuse me while I take my foot out of my mouth…
“Everything that can be invented has been invented.”
Charles H. Duell, Commissioner, U.S. Patent Office, 1899
“The wireless music box has no imaginable commercial value. Who would
pay for a message sent to nobody in particular?”
David Sarnoff’s associates in response to his urgings for investment in the
radio in the 1920’s
“This ‘telephone’ has too many shortcomings to be seriously considered as a
means of communication. The device is inherently of no value to us.”
Western Union, internal memo, 1876
Page 3 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
…and put the other one in
Vodacom's initial growth projections catered for 250,000 subscribers within
ten years.
Vodacom’s initial projections for the number of prepaid customers was
50 000
Coopers & Lybrand estimated 160,000 - 220,000 subscribers by the year
2002
M-Net Communications Technologies CE Ian Wilkinson calculated a potential
base of 300,000 - 500,000 subscribers by 2004
Page 4 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
The ultimate disruption
•
In 2004 Africa added almost 15 million new mobile cellular
subscribers to its subscriber base;
•
Equivalent to the total number of (fixed and mobile)
telephone subscribers on the continent in 1996, just
eight years earlier 1;
•
Only 8% of people in Africa use a mobile phone but 52%
of the population in low income countries as a whole live
in areas with wireless reception 2;
•
This difference fuels the expectation that growth will
continue at rapid rates, with some analysts predicting that
there will be close to 200 million mobile subscribers in
Africa by 20103.
•
Relative to mobile phones, internet usage is low: outside
of South Africa, barely 1% of Africans access the internet.
1.
ITU data, Gray (2005:1)
2.
David Porteous - THE ENABLING ENVIRONMENT FOR MOBILE BANKING IN AFRICA
3.
IT Web Market Monitor 5 May 2006
Page 5 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Why is GSM so successful in Africa1?
•
•
•
GSM technology vs Fixed line;
• The shorter payback period on investment compared to fixed line;
• Lower installation costs and faster build than fixed line;
• Straightforward scalability of mobile compared to other infrastructure
investments.
• Greater ability to overcome geographic hurdles eg mountains,deserts.
Complementary with lower levels of skills than needed for computers or the
internet;
• Illiteracy and minority languages;
Lower social/income entry barriers than the internet;
• Lower up-front expenditure - (Vodacom SIM Pack Sold for R49.99 (approx $7)with
R55 airtime voucher included);
•
•
1.
• Greater ease of sharing mobile handsets than fixed line telephony.
Business model innovations:
• Pre-pay which helps overcome credit barriers;
• Micro-entrepreneurship;
• Mobiles as public telephones.
Government and regulatory change:
• Competition with fixed incumbent, stimulating the growth of the
telecommunications market;
• Liberalisation of the telecoms market;
• Rollout requirements in licences such as rural coverage.
Africa: The Impact of Mobile Phones, The Vodafone Policy Paper Series • Number 2 • March 2005
Page 6 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Technologies typically available for mobile banking
SMS
•
•
•
•
USSD
•
•
•
Good for notifications;
Keyword based services;
Micro Payment services via premium
rated services;
Available on any handset.
Menu based services;
More intuitive than SMS;
Available on any handset.
WIG/SIM Toolkit
• Application has to be downloaded;
• SMS based;
• Encrypted;
• Usability an issue?
Java
• Complicated to implement;
• Application has to be downloaded;
• J2ME compatibility not ubiquitous.
WAP
•
•
•
Handset limitations (growing
penetration);
Many networks in Africa not packetdata enabled yet (GPRS/3G/HSDPA);
But will become the access medium of
choice in the future.
Page 7 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Technologies deployed in South Africa
FNB
(division of FirstRand)
SMS
USSD
√
√
ABSA
Wizzit
(division of Bank of
Athens)
Standard Bank
WIG
√
√
√
√
√
√
√
Nedbank
MTN Banking
(division of Standard
Bank)
WAP
√
Page 8 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Typical business models for mobile banking
•
•
Additive model
• Primarily target existing banked customers;
•
Offers the mobile channel as an additional channel;
•
Alongside or as part of others (such as internet).
•
FNB, ABSA, Standard Bank, Nedbank
Transformational model
• Intentionally reaches out to markets beyond the
existing banked groups;
•
Product offering which meets the known needs of the
unbanked groups.
•
Wizzit, Celpay.
Page 9 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Business models deployed in South Africa
Additive
FNB
(division of FirstRand)
ABSA
Transformational
√
√
Wizzit
√
(division of Bank of Athens)
Standard Bank
√
Nedbank
√
MTN Banking
(division of Standard Bank)
Page 10 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
√
Banking in Africa? Depends where you are…
Developing markets
(e.g. Zambia):
Sophisticated markets
(e.g. South Africa)
Well established and strong banking sector;
Good penetration;
Banking a trusted sector;
High level of technology
and innovation.
Banking established for a significant period;
Processes bureaucratic and old-fashioned;
Technology limited and developing.
Conflict/post-war
(e.g. DRC):
Lack of trust in the banking sector;
Low level of savings;
Marred by inaccessibility;
Lack of services and infrastructure;
Corruption: environment
of distrust.
Page 11 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
What do the poor want from their bank1?
Keep my money
safe
Take my cash,
give me cash
I want to pay my
bills and send
money home
1.
David Porteous - THE ENABLING ENVIRONMENT FOR MOBILE BANKING IN AFRICA
Page 12 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Good product mix for mobile banking in Africa
•Balance enquiry;
•Payments and peer-to-peer payments;
•Prepaid airtime.
•…and supported by adequate access to deposit and cash withdrawal facilities.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Aug
Sep
Oct
Nov
Payments
Dec
Jan
Feb
Mar
Transfers
Apr
May
Jun
Prepaid
Jul
Aug
Sep
Oct
Nov
Balance Enquiries
Dec
Jan
Feb
Mar
Other
NOTE: Transactional services such as Celpay Zambia & Celpay DRC can provide the retail
access point for banks that do not have a comprehensive retail network.
Page 13 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Other barriers to rolling out a successful solution
•Regulation as an inhibitor to the
development of a successful solution:
• Technology is bypassing regulatory
guidelines;
• Current regulations do not cater for
new technology;
• "Realness" is lost;
• Practicality of implementing
regulation is difficult.
•Customer education:
• Usability;
• Difficult to "teach" customers due to
remoteness.
•Support and process:
• The support of the solution is critical
Also keep in mind:
• Network coverage;
• Balance the "High-tech" of
the solution with levels of
education and literacy;
Page 14 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
South Africa: 18 Months in review
•
All four major South African banks have launched or relaunched a cellphone banking
offering
•
Cellphone Banking has moved from a “first to market” product to a significant
transaction channel for banks, with millions of transactions worth hundred millions
of rands per month reported
•
Major customer awareness and education campaigns have been undertaken by
all banks, with collective marketing spend estimated at over R100 million for the past
year
•
A proliferation of technology and business models has been adopted, with no clear
winner in terms of technology or business models emerging
•
Adoption by all walks of life has been seen, with the collective registered base in
South Africa estimated more than 500 000
•
Related services, like FNB’s inContact service now have more than 3 million
registered customers
Page 15 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Our lessons
•Technology alone cannot guarantee
success;
•Regulation should incubate, not
inhibit;
•Technology is an enabler;
•It has to be supported by a solid product
offering;
•3 P’s – Product, people, process.
• Registration
• Education
How do we encourage access to banking, but
limit:
• Risks related to money laundering?
• Credit exposure?
• We need to find the middle ground.
•Success through strong relationships:
•The needs of the market will dictate
the choice of technology and the
service/product offered to the market;
We need to understand the needs of our
customers;
• Handset capabilities;
• Market segments and their needs.
• Be Afro-centric, traditional European
models can not be applied;
•
•
•
Financial institutions;
Regulatory bodies;
Mobile network operators.
•Good product design is crucial:
•
•
•
Keep it simple:
Easy to understand, easy to use;
If it breaks once, they will not try again;
Page 16 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
Thank you
“We must be the change we wish to see.”
– Mahatma Ghandi
Page 17 | 4 October 2015 | First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Service Provider
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Mobile banking. Technologies, challenges, solutions