Mobile Internet banking spreads in SA

The face of cellphone banking is set to change as take-up of GPRS and 3G cellphones increases, although the SMS-based mobile banking format remains popular.

This is according to SA`s major banking groups, all of which say they are boosting their mobile banking client numbers through special offers and new channels.

This week, Investec leapfrogged the SMS-based mobile banking format and entered the mobile banking market with a service offering Internet banking via cellphone.

Wayne Preston, head of banking services, says Investec spent two years investigating the best way to approach the cellphone banking market before introducing its new product, Investecmobile.

"We investigated a number of options and architectures and settled on this solution that is effectively our online system made available on cellphones."

According to Preston, SMS-based mobile banking solutions can make transactions difficult and costly.

Developed by Cape-based firm Grapevine Interactive, the only requirement of Investec`s new offering is that the cellphones must have Internet functionality and be compatible with GPRS, Edge or 3G technology.

However, while Investec`s client base is mainly the wealthy who are likely to have WAP-enabled phones, the mainstream banks report that SMS-based mobile banking is still their most popular mobile banking option.

Absa also announced an Internet banking via cellphone option this week, saying while its SMS-format mobile banking solution is fairly popular among clients, the new format offers several advantages.

Christo Vrey, Absa`s head of digital channels, says the advent of WAP II and 3G protocols will increase the penetration of cellphone banking in the market, and these technologies also increase the convergence of the banking product offerings.

"This is what we call the 'cross-channel` multi-factor, meaning that all our products are accessible through a number of transaction channels, with cellphone Internet banking being one of them."

Vrey says the overall market uptake of cellphone banking has been relatively slow and this contributed to the bank`s recent decision to offer a six-month extension of its free mobile banking service until the end of September.

Nedbank says it is on the verge of introducing several new cellphone banking services to "meet the mobile banking needs of all segments of the market". However, Saks Ntombela, MD of Nedbank Retail Product Solutions, doesn`t envisage a major swing to Internet banking via cellphone yet.

"There will be a need for mobile banking solutions that are based both on GPRS/WAP and SMS platforms for the foreseeable future as the majority of the handsets in the market do not have GPRS/WAP functionality. We estimate that less than a third of handsets in the market have WAP/GPRS functionality," he says.

"Nedbank`s existing mobile banking offering was launched in 2000 on now outdated technology. The current functionality includes balance enquiries, mini-statements, inter-account transfers, account payments and PIN changes," Ntombela notes.

"We are in the process of developing a range of cellphone banking services to meet the mobile banking needs of all segments of the market. The first of these services will be launched soon as we want to provide our clients with world-class mobile banking services and attract new clients."

Len Pienaar, CEO of FNB Mobile and Transact Services, says: "At the moment we are focusing on making cellphone banking available to all our customers, on any phone, on any network. We launched a WAP [mobile Internet] offering a few years ago, but it enjoyed very little take-up from our customers, compared to our current menu and SMS cellphone banking offering. As our customers start accepting other technologies, we will follow them."

FNB says its mobile banking service is one of the bank`s fastest growing businesses. FNB has recorded around 1.8 million transactions valued at R200 million since the launch of its mobile banking service in March 2005, it says.

"The choice of offering SMS and USSD as the primary interface for our customers, combined with the use of open source software, allowed FNB to create a cost-effective platform at a fraction of the cost of traditional mobile banking platforms," Pienaar says.

BMI-TechKnowledge banking analyst Althea Bacchialoni says there is still a lot of scepticism in the market about cellphone banking.

"In our research we have found that people are still very concerned about security, the size of cellphone screens that makes reading information difficult, and that a cellphone is a very personal item seen mainly for voice calls," she says.

Craig Terblanche, business and technology advisor at consultancy Marketworks, says the uptake of Internet banking over 3G cellular networks will not be as quick as some would like.

"People will move to 3G handsets as part of their normal upgrades. I don`t think there will be a rush to get 3G handsets just because they can now do Internet banking over their cellphones."

Terblanche says the advantage is that cellphone and online banking is a far cheaper transaction proposition for the banks and the advent of 3G has helped them to develop a proper audit trail for mobile banking.