The window of opportunity for companies to grab a lead in the mobile banking and financial services sector is fast approaching, but it is still anyone's game, says MXit CEO Herman Heunis.
The mobile social networking service is slowly making a name for itself as a mobile financial services route, especially for the masses of unbanked people in SA and the rest of the continent. However, Heunis contends a lot still has to be done.
“A lot of people want to emulate the success in Kenya of [Safaricom's] M-PESA service, but exactly who will be able to and what the best route to offer such services will be is still an open question,” he says.
Some 40% of SA's 48 million people are considered unbanked; in other words, they have no access to a bank account, or do not meet the various financial regulations to open one.
There are three main channels to offer mobile banking services. The first is through the banks or other financial services companies themselves. Then there are the services offered by the mobile network operators, and the third is via a social network service. The first two solutions depend heavily on SMS and this, Heunis says, can be an expensive option for many poor people.
MXit has kept an eye on the emergence of mobile financial services. It has an alliance with First National Bank to facilitate credit card transactions for its clients who want to purchase “Moola” - MXit's virtual currency that its subscribers can use to purchase various services. It has also reached an agreement with Standard Bank to offer “mimoney”, the bank's own mobile payment transaction service.
Getting traction
“The traction is not what we hoped for yet. This is because the infrastructure to support financial transactions has to be set up and to ensure it meets certain legislative requirements such as the National Payments Systems Act and, of course, user education on our side,” Heunis says.
However, he is positive the “traction” that both MXit and Standard Bank are looking for in terms of user acceptance will occur over the next year.
Jaco Hattingh, CEO of MXit Africa, predicts that, in Africa, where there are over 300 million adults with no access to financial services, there will be a mass move from traditional banking services, that offer savings and cheque accounts, to those that allow for person-to-person transactions through mobile devices.
“This is where MXit comes in. The low data costs of operating a mobile social network and instant messenger allows banks to deliver mobile banking solutions that cost a fraction of the cost of normal data downloads through traditional mobile Internet platforms.
“Mobile phones present an opportunity to provide quality banking solutions for all. In developing countries like Africa, with a huge unbanked market, innovative banking and payment services like these could provide the first step towards breaking out of the poverty trap for low-income individuals. While in developed markets it simply means convenience for an increasingly mobile lifestyle,” notes Hattingh.
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