SA's mobile banking market booms

South Africa's largest banks are racing to gain market share in the mobile banking market.

First National Bank's (FNB) eWallet has seen 239% growth in its subscriber base since its inception in November last year, and currently processes R1 million a day in virtual money transactions.

Yolande van Wyk, CEO of FNB Smart Services, says the growth in mobile money transactions is driven mainly by banking customers working in urban regions, who are sending money back home to unbanked relatives living in rural areas.

“This solution has given our customers an alternative to sending cash instantly and securely to family and friends without having to pay bank fees or transport costs,” says Van Wyk.

She explains that the cash recipient doesn't have to be an FNB customer to receive the money sent to them, and don't have to have a debit card to withdraw the cash at an FNB ATM.

“The recipient also has a choice to either withdraw cash or make use of various electronic transaction options, including purchasing prepaid products such as airtime or sending money to someone else.”

The eWallet offering is free of any bank charges until July. Van Wyk says costs for the service will be revealed at a later date. However, eWallet recipients will be allowed to continue withdrawing money free from an FNB ATM.

Van Wyk notes: “FNB's eWallet has grown beyond our expectations and is a service that's filling a need in the market. What we will see in the future is a movement towards digital cash. We will never have a cashless society, but this will create a safe alternative to make it easier for people to access their money.”

FNB is not the only large bank to invest heavily in mobile banking. Tumi Monale, Standard Bank director of self-service banking, says the proliferation of mobile phone users has opened up opportunities for financial organisations to offer alternative methods of cash transaction.

According to Monale, Standard Bank has been operating in mobile banking for 10 years, offering e-wallet services such as MiMoney, whereby cash can be sent via a mobile phone and redeemed at a Spar point-of-sale or at an ATM.

Standard Bank is driving its community banking project, which is in its pilot phase. The initiative targets communities that do not have easy access to a bank or cannot afford traditional bank charges.

Community leaders are elected to represent the bank and give out SIM cards to community members, which they can use to transact and deposit cash into their account or at a retailer. Some sites in Tembisa and KwaZulu-Natal are using this system and it's expected to be introduced throughout SA.

Monale says Standard Bank provides mobile banking services to WAP-enabled cellphones as well as simple peer-to-peer transaction services. “We've still got a lot more offerings that we will be bringing to the market for the rest of this year,” says Monale.

Absa has also been bullish about driving mobile banking. According to Adrian Vermooten, Absa head of mobile banking and messaging, more than 50% of Absa's customer base interacts with the bank via mobile phones.

Absa began mobile banking in SA in 2000 and serves the entire spectrum of banking segments including MegaU.mobi for students and Absa Extreme.mobi for life insurance for active people. Vermooten explains that CashSend is Absa's largest mobile banking product, and similar to FNB's eWallet, enables a banked customer to transfer cash to anyone, including the unbanked.

“We have just under two million customers for our mobile banking and processed R8 billion in mobile transactions in 2009,” says Vermooten.

He adds that from a security perspective, Absa CashSend requires the sender to choose a six-digit PIN which is confidentially shared with the recipient, and the banking system generates another 10-digit PIN sent to the recipient to prevent cases of fraud.

In the World Wide Worx Mobility 2009 study, it was found that while 16% of banking customers in SA use the Internet for banking, 28% use their cellphones. A total of 34% of banking customers use one or both of these channels.

In addition, it was found that the number of mobile broadband Internet subscribers has grown by 88% in the past year, with 930 000 wireless broadband subscribers.

According to a research report by Berg Insight, the worldwide number of users of mobile banking and related services is forecasted to grow at a compound annual growth rate of 59.2%, from 55 million users in 2009 to 894 million in 2015.

The global number of mobile banking users more than doubled between 2008 and 2009, and is expected to almost double again in 2010, says the research firm.