The introduction of the financial services charter in 2003 raised many challenges and issues for South African banks. Providing access to banking was one of the most pertinent issues brought about by the charter. In accordance with the charter, all South African banks need to provide banking facilities to individuals living in rural areas within a 20km radius by 2009. But how are banks going to meet these challenges?
According to Mike Arnold, CEO of First National Bank`s (FNB) Self-Service Channel: "A long time before the introduction of the financial services charter, FNB began working on using technology to provide greater access to banking services to the South African population. Three years ago, we introduced a low-cost in-store ATM primarily intended for sites in rural areas where the transaction volumes do not warrant a full-sized ATM. This was branded as a 'Mini-ATM` and has successfully been deployed to some 1 200 retail stores around SA. The Mini-ATM is a key component in FNB`s strategy to provide banking services to previously unbanked individuals."
Technologically, the terminals broke new ground by using the IP communication protocol; this made a departure from normal full size ATMs which use IBM`s SNA protocol. The use of IP enables the terminals to use communication networks such as GSM, GPRS (General Packet Radio Services) and Telkom`s VIPdial service. The Mini-ATMs have until recently been exclusively using an analogue dial-up modem operating on normal Telkom voice lines.
"However, the emergence of the GPRS data service by the cellular network operators was seen as a new opportunity by FNB since GPRS promises a number of advantages," adds Arnold.
Since GPRS has no reliance on landlines, it allows FNB to rapidly deploy Mini-ATMs to new sites where previously there was often a lengthy delay waiting for lines to be installed. Service interruptions caused by cable theft are also a thing of the past.
With GPRS, the terminal is always connected to the network; this effectively removes any delays experienced on each and every transaction caused by dialling, authenticating and logging on to the network. It also means that the terminal can be remotely monitored.
In addition, the data speed of GPRS is higher than that of analogue modems. The GPRS-enabled Mini-ATM terminals are experiencing a practical speed increase of four times that of analogue devices. This also helps speed up transactions and will significantly decrease the time taken to download new software to the terminal.
"To date, FNB has successfully piloted a number of Mini-ATM terminals on GPRS; these were deliberately located at remote rural sites that had either erratic Telkom infrastructure or none at all. Since the pilot was done with MTN, the only network criterion was an MTN signal. The pilot terminals made use of a Nokia modem that was modified to monitor the terminal and send a SMS message to a monitoring system should the terminal develop a fault. GPRS sites that previously used conventional dial-up services reported better service availability and faster transaction times."
In addition to providing access to banking services, rural communities benefit from such technology because funds are kept within the local community. "Traditionally individuals had to travel over 50km to do their banking and then would buy goods in that specific town. Now people will be able to bank in their local communities and spend money in their own time, helping the local community to thrive," says Arnold.
"Overall, the major benefit to FNB is lower communication costs and the benefits to the customer include faster transaction times and faster moving queues during busy times. And of course it permits FNB to deploy ATMs into areas that until now have had no access to financial services. That is a real win for people living in these areas," Arnold concludes.
FNB is a division of FirstRand Bank Limited and an authorised financial services provider.
For any product or service related client queries, please contact the ESolutions call centre on 086 11 00 141.
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