Cellphone banking solves most of the problems that e-commerce encounters when attempting to embrace Africa`s vast unbanked population, says Wizzit marketing director Brian Richardson.
Speaking at Terrapinn`s second annual African Banking Congress in Sandton this week, Richardson said whereas the banked population was spoilt for choice with regard to ways to move money around, the unbanked population was cash-bound.
"The problems with cash include security, costs, transfers to family or friends, queues, and safety concerns," he said.
Transferring money is especially a problem for migrant labour, he pointed out.
Richardson said Internet banking is not the answer, as e-commerce encounters obstacles of its own in Africa. These include problems with electricity supply, connectivity, the entry cost of PCs, computer literacy, and channel costs.
"The uptake of Internet banking is high in developed countries, but not in developing countries. Mobile penetration in Africa is far higher than Internet penetration," he said.
Sandton-based Wizzit, launched in 2004, administers a cellular banking facility, complete with a Maestro debit card.
The company has an alliance partnership with the South African Bank of Athens.
Counter-view
However, speaking at the same conference, CEO of Mobile & Transact Solutions at First National Bank (FNB), said he did not think cellular banking alone was the solution to the problem of unbanked.
"You need to offer a bank. Cellphone banking is only one element of that."
Pienaar said cellphone banking has moved from being a fad to a niche product, with the challenge now to bring it into the mainstream.
Part of that is ensuring customers can access the service. This means there is a need for multiple registration options: ATMs, branches, handsets, call centres, and the Internet, among others.
"You have to be able to offer a proliferation of registration methods."
Pienaar said FNB sees about 20 000 cellphone banking registrations each month, on average.
He said 46% of registrations take place through ATMs, 33% through branches, 14% via the Internet and 7% through a contact centre.
Richardson admitted a cellular banking product faces its own challenges, including distribution, financial literacy levels and trust.
Another major challenge was the issue of getting cash in and out of the account. "There isn`t a major point-of-sale infrastructure outside the cities," he noted. However, this was overcome to an extent by the fact that Maestro cards can be used in ATMs.
Richardson said Wizzit has managed to overcome most of these challenges and has proven to be a success story, despite critics` initial predictions of failure.
"In fact, we are ahead of budget of where we wanted to be when we launched. Wizzit was budgeted to break even after three years at 100 000 customers. Indications are that we are double that."
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