I was surprised to learn that, according to ITWeb`s reader poll, 62% of the respondents believe that Absa`s free Internet model is an unsustainable business. Granted, in its current form it is far from profitable, and this exercise in "branding" must be costing the bank a fortune. Returns are hard to gauge. It must all seem like a white elephant to many.
[VIDEO]What people don`t understand is the potential long-term strategy that an Internet service provider (ISP) can help leverage for a company the size of Absa. MIH had similar goals to Absa - hence the creation of M-Web, a potentially brilliant business move.
However, somewhere between planning and implementation, MIH`s strategy seemed to take a strange alternative path. As I understood it, MIH planned to use M-Web`s large customer base to cross-pollinate with projects like OpenTV, DSTV, M-Net, M-Tel, and its other telecoms and communications infrastructures.
Visionary
MIH saw the television as one of the key devices that a user could utilise to access the Internet. It saw the computer as another way of accessing television and the mobile phone as another window to a world of interconnected communication devices. It was all quite visionary and it was all coming together quite nicely. With each new business the company embarked on, the vision became clearer.
Unfortunately, it seems to have never managed to implement this all-encompassing strategy among the business units. Product never seemed to reach the end-user, and if it did, it came in drips and drabs. A little bit of banking through a set-top box does not a new world order make.
The relationship game is typical of the new e-business world. People have learnt the hard way to keep to what they know.
Jason Norwood-Young, Technology editor, ITWeb
Absa now has the opportunity to implement where MIH left off. As a bank, it has the advantage of strong relationships which will allow it to bring services to market under its brand, without having to stray too far from its core competency - handling money. As the cost of moving money is becoming an expensive proposition, and the necessity for micro-transactions at an acceptable price point increases, Absa (and all banks) need to find new ways of doing business. The free Internet strategy could help it realise its vision.
The relationship game is typical of the new e-business world. People have learnt the hard way to keep to what they know. Absa is not a technology company, and it is not an ISP. It is not a retailer, and it is not a content provider. It needs all of these components to build a successful e-business strategy. The partnerships it is making with IBM, Affinity and ICL, are already filling up those necessary gaps. Rumours abound about the retail component, with Pick 'n Pay one of my top picks for filling this niche.
Pick 'n Pay wanted to be a bank, and was actually fairly successful at it. A few years ago, it allowed shoppers to open small savings accounts to help them with their purchases. Now its point-of-sale system allows shoppers to swipe their card through and make purchases through savings accounts, cheque accounts and credit accounts. This simple functionality has made Pick 'n Pay my choice of grocery retailer.
Eyeballs
It is a logical step forward for Absa to utilise those thousands of eyeballs that it has captured through its Internet offering to drive users to Pick 'n Pay`s e-commerce offering - a service that I hear is currently under development, and in its testing phase. If it does so, micro-purchasing could become a reasonable proposition for both the retailer and the bank, while cash slowly disappears from our pockets and into the bank, right where they want it.
Transactions will tend to move through the bank rather than directly to the retailer (be it Pick 'n Pay or another retailer), allowing Absa to pick up its commission while simultaneously charging consumers a service fee. Pick 'n Pay opens up another channel to market, thus driving more revenue through its institution.
I am merely speculating on Absa`s probable course of action, partly based on experience, and partly from rumours circulating in the market. If it does manage to pull off such a project, then the vision of e-commerce in SA will become a reality.
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