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Rural disconnect in m-banking

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 25 Jul 2012

A local mobility study reveals that cellphone banking presents untapped potential in the line of commerce, and there is a discernible divide in terms of rural and urban use.

This is according to World Wide Worx's latest research study, “Mobility 2012 - The Mobile Consumer in SA”, which is backed by First National Bank (FNB).

“Only 5% of cellphone bankers exclusively use phone browsers for the purpose, but a further 36% use the browsers, as well as text-based services,” it states.

The study reveals that, while most cellphone banking is still conducted via text-based services - such as USSD and SMS - more than a third of banking customers now also use phone browsers to execute banking activities.

The most prevalent use of cellphone banking, shows the study, is the purchase of airtime - making up 74% of the usage statistics. Conversely, only 15% of cellphone banking customers pay accounts via their phones. At the lowest end of the usage spectrum are phone-based purchases of physical products that are delivered to the buyer - which comprises only 4% of urban cellphone users - and zero rural users.

World Wide Worx MD Arthur Goldstuck says mobile commerce embodies a considerable, yet dormant, opportunity. “But virtual business will always need infrastructure, and that remains the barrier to cellphone purchases of physical product.”

Urban-rural divide

Demographically, the Mobility 2012 project covers the South African landscape - via interviews with a nationally representative sample of South African adult cellphone users living in cities and towns.

According to the study, along with airtime purchases, the core of mobile commerce is steeped in the transfer of airtime. More than half of cellphone banking customers transfer airtime, with rural users much more likely to do so than urban users (69%, as opposed to 51% of urban users).

“The same gap exists in mobile purchases of prepaid electricity, with 33% of rural cellphone banking users and only 21% of urban users doing so via their phones.” The study reveals repetition of the divide in sending money to other individuals via cellphone banking - with 44% of rural versus 34% of urban interviewees using this application.

Goldstuck notes that the popularity of money and airtime transfers via cellphone banking is one of the clues as to why standalone mobile money transfer services have not taken off in SA. “There simply is no desperate need for them, as there is in other African countries.”

Further entrenching the urban-rural divide is the proportion of prepaid users. While 80% of urban users have prepaid accounts, 94% of rural users opt for the pay-as-you-go model.

Dashboard Research CEO Peter Searll delineates how users spend across the disparate demographics: “The average phone spend of contract users is R387 per month, more than double that of rural users, who spend an average of R165 a month.”

Ravesh Ramlakan, CEO of FNB Cellphone Banking, says these figures highlight the priority that needs to be placed on providing services that simplify lives and reduce costs of using financial services. Urban customers, he says, may primarily enjoy the convenience and savings associated with cellphone banking - but rural users' lives can be changed by the technology.

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