First National Bank (FNB) is unfazed by telcos looking to disrupt its eWallet mobile money offering.
So said FNB CEO Jacques Celliers, in a wide-ranging interview with ITWeb after the big four bank last week announced its financial results for the six months to December 2019.
Celliers was responding to whether MTN’s recently re-launched Mobile Money (MoMo) offering will have any impact on the bank’s eWallet service, which is already well-established in the South African market.
This is despite South African mobile operators failing to crack the local mobile money industry, although they have enjoyed success with these products in other African jurisdictions.
In a second attempt, in January this year, MTN SA relaunched its MoMo platform, with CEO Godfrey Motsa saying he was “stubbornly confident” the product will be a success and “failure was not an option” this time around.
In September 2016, MTN SA announced it was decommissioning the MoMo offering in the country due to lack of commercial viability.
The service was originally launched in 2012 when MTN partnered with the South African Bank of Athens, Pick n Pay and Boxer stores to offer a mobile money solution enabling the opening of simple bank accounts via phones.
In May 2016, Vodacom also pulled the plug on its offering, M-Pesa, in South Africa.
Spoilt for choice
Market analysts recently told ITWeb that the advancement in mobile banking applications and eWallet services has gained traction in recent years and this will create a significant challenge for mobile money services in SA.
In its latest financial results, FNB said inclusive banking products like eWallet are showing strong growth, with all metrics up strongly with over 26 million sends seen over the period.
In February, the bank said consumers in SA’s top economic hubs continue sending the most money via eWallet services.
According to FNB, Gauteng outperformed all the provinces by sending over 42% of eWallet funds during the 2019 festive period. Completing the top three was KwaZulu-Natal with 12% and Western Cape with 7%.
In total, the bank’s customers sent nearly R3 billion worth of eWallet funds over the festive season, recording a 20% spike in comparison to the same time in 2018.
Gauteng alone accounted for over R1 billion worth of eWallet transactions, followed by KwaZulu-Natal with over R300 million and Cape Town with close to R200 million.
Speaking to ITWeb last week, Celliers said disruption is coming from all angles and FNB respects all the competition, whether it’s coming from the traditional banking sector or new models of banking.
However, he added: “I think in our eWallet value proposition at the moment, it will be hard for them [MTN] to outdo. They may be able to do more wallets very quickly but I think they will struggle to get more activity through the wallets that quickly.
Cash still a factor
“So what we have clearly ahead of them is, on one element, how do you fund a wallet? We fund wallets out of banking behaviours from mostly salaries. For example, when you pay someone who works in your garden, or when a farmer pays a worker, or when you send money to your child – that’s something that is well-entrenched in our South African market.
“In order to dislodge that, you have to find a way to fund the wallet the way we do out of the salary spender category,” said Celliers.
He added that the other advantage the bank’s eWallet has is its ATM footprint across the country.
“We have ATMs that users can withdraw their cash from, and that helps in the wallet space. If you can integrate the wallet into spender activities, then you clearly have a value proposition.
“However, I think there is enough space for more players in this market. I don’t think it’s a topic that anyone will always own. But we are very chuffed with the growth that we are seeing in our eWallet,” he noted.
Meanwhile, Standard Bank last year said it is seeing a month-on-month increase of 70 000 new customers using its Instant Money service.
Furthermore, it said, transaction volumes are climbing steadily at 20% year-on-year, while transactional values are seeing a 26% increase year-on-year.
Standard Bank’s Instant Money service is the equivalent of FNB’s eWallet or Absa’s CashSend offerings. It allows customers to send cash to anyone in SA with a cellphone number, for PIN-controlled cardless collection at any of the bank’s ATMs or retail partners.