The number of online bank accounts in SA passed the million mark at the end of last year, and an online banking increase of 30% is expected during 2004. However, the potential market for mobile banking is even bigger, say Internet analyst World Wide Worx.
According to the first annual World Wide Worx "Online Banking in South Africa 2004" study, the number of online bank accounts in SA grew by 28% to 1.04 million last year, despite the online security scare that hit Internet banking during 2003. Over 162 million transactions worth around R198 billion were conducted via SA`s online banking services last year.
Arthur Goldstuck, MD of World Wide Worx, says just under 25% of these are business accounts.
The business account sector is expected to show slower growth than the individual account sector in terms of online banking, mainly because most businesses that can transact online already do so, he says.
Goldstuck says the survey showed that Absa holds the largest number of online banking accounts, substantially ahead of its nearest competition. Goldstuck attributes this to Absa`s Internet service provider (ISP) strategy, which stirred much debate at its launch.
"I think their ISP strategy has been very effective," says Goldstuck. "I believe that in the long run, Absa`s free Internet strategy, which later saw it become one of the fastest-growing paid ISPs in the country, gave it a significant Internet customer base for cross-selling purposes."
The study says Standard Bank is expected to catch up significantly during 2004. Both banks have aggressive marketing campaigns around Internet connectivity, which appears to have been a key to their dominance of this market niche.
As for 20Twenty, says Goldstuck, the service is still in a consolidation and relaunch phase, so it is not easy to predict how this will impact on this year`s online banking figures.
"They have kept a fair proportion of their client base, but now they must build on it. It will be hard for them to replicate the kind of hype they stirred at their initial launch. On the other hand, with their corporate banking support, they could now be taken more seriously."
The survey also showed that mobile banking had not yet taken root in SA, but most of the banks expected strong take-up during 2004. "eBucks leads the way here, having already pioneered the use of SMS to verify transactions."
Goldstuck says around 67 000 people in SA are using mobile banking services, and that this figure will more than double this year. "This may seem like a large number, but in reality it is still a very small proportion of the potential market. Mobile banking is still not very convenient or cheap, but as phone capabilities and interfaces improve, it will grow substantially - and could be bigger than online banking."
What customers want
The survey also evaluated the usability, transactional functionality and content strategy of online banking sites. Goldstuck says that overall, banks are paying more attention to what customers want and making their banking sites far more user-friendly.
Icanonline and Absa came out as the best online banking sites in terms of general usability, eBucks scored highest on transactional functionality, and Absa came out top in terms of its Web site content strategy. Absa scored highest in the combined benchmark, which provides an indication of Web site effectiveness and competitive-edge.
"It is gratifying to see the extent to which the overall standard of all the online banking sites has improved," says Goldstuck. "The banks have worked hard to reduce click-throughs and boost security. Unfortunately, they are still not making the most of their content to market to their existing customer base. They should be 'fishing where the fish are`, as the old expression goes," he says.
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