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FNB drives discounted devices


Johannesburg, 20 Oct 2011

In light of the rapidly increasing use of smartphones and tablets, First National Bank (FNB) announced yesterday that it would provide its customers with the devices at reduced rates.

Currently, there are an estimated eight million smartphones in circulation in SA, and the Apple iPad 2 is the world's leading tablet device in terms of market share.

FNB says it will effectively lower the cost of these devices by up to 35%. “Clients will be able to select from a range of smartphones or tablets, including the Apple iPad 2.”

The offer is a bid on the part of the bank to promote day-to-day banking via electronic banking channels, such as the FNB banking app, Internet and mobile banking, as well as to encourage card as opposed to cash payments.

The smartphones, says FNB, will come preloaded with the FNB banking app. Debuting in July as SA's first transactional banking app, it has reportedly remained one of the most downloaded apps across all app stores, including Apple App Store, Blackberry App World and Android Market.

Device accessibility

Kartik Mistry, product owner at FNB Core Banking Solutions, says the initiative is aimed at putting smartphones and tablets “in the customer's hands”. He adds that FNB intends to promote access to electronic banking.

FNB gold and platinum cheque account holders will be able to select from a range of smartphones, such as the HTC Sensation, HTC Wildfire S or BlackBerry Curve 8520. Customers who already have smartphones will also be able to select an Apple iPad 2 or HTC Flyer tablet.

Mistry says the device costs will be included in the customer's monthly banking fees. He adds that the offer on the Apple iPad 2 is unique. “There are generally no finance options available to the market so this addresses accessibility.”

Farren Roper, head of products and markets at FNB Connect, says the FNB Banking App allows customers to do the following:

* Day-to-day banking;
* View Forex rates;
* Buy prepaid airtime;
* Make calls within SA at the cheapest rates;
* Make cheap international calls with no roaming activation; and
* Find FNB branches and ATMs using location-based services.

The smartphone and tablet offer is available to new and existing FNB cheque account holders. “Soon, FNB private clients and RMB private bank clients will [also] have access to this offer,” says Mistry.

Mistry says customers who wish to take up this offer can SMS 'phone' or 'tablet' to 32812.

Market impact

According to retailers, channels and analysts, the FNB offering will not impact the local smartphone and tablet market in any significant measure and is likely to be affirmatively received in general.

Vodacom executive head of media relations Richard Boorman says the offer “sounds like great news for the networks” in that it is likely to increase the number of people using smartphones and other connected devices.

Core Group, a distributor for Apple in SA, says the offer will increase accessibility to the FNB app and offer greater mobility and convenience in the banking sector.

Core Group's executive director, RJ van Spaandonk, says the group is pleased with the uptake of the FNB app on the iOS platform.

He adds that the app environment is growing rapidly. “Apple recently announced that 18 billion apps have been downloaded by the more than 250 million iPod touch, iPhone and iPad users worldwide. More than 500 000 apps are available on the iTunes App Store and have resulted in it being the number one mobile app store worldwide.

“These figures prove the popularity of apps and iOS devices and we encourage local developers and businesses to create apps.”

MD of World Wide Worx Arthur Goldstuck says the move creates an additional channel for the sales of these products, which would probably mean a positive impact on tablet sales.

“Phone deals are more readily available, so it probably won't raise eyebrows in that category. If [FNB is] offering the high-end iPad at the reduced price, it will certainly be attractive to customers. The HTC Flyer is a great seven-inch tablet, but has been overpriced in this market. The offering brings it down to a realistic price, and makes it a real competitor.

“Overall, it may persuade other channels to make their own offerings more attractive.”

Tyrone Vieira, merchandise director at Massdiscounters, a division of Massmart, says while the group sees the offer as an interesting development, it is not expected to impact notably on its sales.

“Many of these devices are complex and require a sound in-store experience to support the consumer pre and post the sale. Many of the devices are sold on the 'tactile' nature and the customer interface or 'user experience' and our observations have been that customers want to touch and feel the devices and navigate through the screens prior to committing to a purchase.

“The prospect of reduced pricing will obviously be a compelling proposition for all customers, but in a segment where margins are already paper-thin, there is no 'free-lunch' and, therefore, the consumer will land up paying somewhere for the 'saving',” he adds.

“SA is very competitive in terms of pricing on entry and mid-level electronics and technology,” says Vieira. “When a price comparison is done in the correct, scientific manner, one will see that the market is indeed well priced for consumer electronics and therefore margins are already thin.

“More than anything else, we believe that the factor that will reduce pricing most significantly will be factory gate reductions as the technology matures and the further reduction of data tariffs, which will allow for more aggressive bundle ownership deals.”

Vieira adds that the FNB offer will doubtlessly create downward pricing pressure in the industry. “At the end of the day, that is good for consumers for as long as the model can be sustained.”

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