Mobile banking has not yet transformed the unbanked but successes are notching up with the right strategies in place, writes Maya Fisher-French
The story of Wizzit Bank is something MBA dreams are made of. Wizzit came into the market more than three years ago, just ahead of the launch of MTN Banking.
Both banking models were based on cellphone banking, allowing customers to pay bills, do money transfers and top up airtime using their cellphones.
MTN Banking had the backing of Standard Bank and MTN, two of South Africa's largest companies with extremely strong brands. Wizzit was the dream of two men to bring banking to the unbanked.
Brian Richardson, managing director, and chair Charles Rowlinson sunk their own money into the venture—at enormous personal risk if the business failed. The relative success of Wizzit in this market proves that success is about leadership and understanding your market rather than deep pockets.
Despite an aggressive above-the-line advertising campaign and media launch, MTN Banking ran into trouble within the first year, resulting in a major shake-up of the business model. Managing director Jenny Hoffman was replaced and the company moved from above-line advertising to going directly to market.
In fact it moved to a model similar to the one used by Wizzit in which agents go into communities to sign up new accounts directly. Wizzit's model is to employ unemployed people, called Wizzkids, to go directly to unbanked potential customers and sign them up. These Wizzkids are usually part of the community and provide ongoing support to customers, a strategy that underlies Wizzit's success. Although MTN Banking and Wizzit have a similar number of account holders—about 300 000—the number of active Wizzit accounts is more than 60% compared with MTN Banking's 20%.
Richardson believes the high level of transactions is thanks to the way Wizzkids are incentivised. Wizzit charges R39,99 per new account, of which the agent receives a percentage. But the agent is further incentivised through annuity income based on the transaction level of the account holders. This motivates the Wizzkids to work with the community and train them to use their accounts.
Both MTN Banking and Wizzit customers can top up airtime, check account balances, transfer money and pay electricity bills—all with their cellphones. This allows people living in rural areas, where access to banks and payment points are limited, to save. But perhaps the real reason Wizzit, with absolutely no advertising or large capital injections, has been relatively successful is because the motivation behind creating the bank was to deliver affordable and accessible banking to the lower-income earner.
The MTN Banking model was created to support the network. The idea was that if people opened up a bank account, which they could access only through the MTN network, it would be an incentive to stick with the network. At the same time, if customers used their cellphones to top up airtime, MTN did not need to pay distributors any commission. But MobileMoney, the MTN Banking product, might have greater success outside of South Africa.
Terry Timson of MTN Banking says MTN has rolled out Mobile-Money products as a pilot phase in other African countries and is hoping to be active in four or five countries by the end of the year.
Timson says MTN hopes this will be a success, as many African countries do not have a banking system as extensive as South Africa's and the demand for mobile banking will be greater. He says the company has learned its lessons and will focus on those functions that are the most popular—including airtime top-up and money transfers.
Richardson and Timson agree that although mobile banking is likely to be standard in the future, it will take time for people to move to this way of banking. "Mobile banking is an industry in its infancy, so it is important that key players stick with it. It is not about making a quick buck. We need MTN to be as successful as other banks, such as FNB, which have focused on mobile banking," says Richardson.
Wizzit's Royal Bafokeng venture
This week Wizzit Bank launched a joint venture with Royal Bafokeng Holdings (RBH) to provide banking services to the Royal Bafokeng nation (RBN). The joint venture, Wizzit Platinum, will deliver full-feature transaction bank accounts to the estimated 300 000-strong, largely unbanked community, based primarily in the North West province.
"More than 70% of the RBN community is unbanked and does not have access to the means or resources to open a bank account with one of the major banks," says Niall Carroll, chief executive of RBH. Eugene Tsitsi, senior manager at RBH Phokeng office, says that although the primary motive for the joint venture is to deliver banking and financial literacy to the Bafokeng people, it will be looking for future opportunities to become a profit-making business and produce a return on their R1-million investment. Future projects include creating an affinity card to encourage people to use the Wizzit Platinum card to support local business.
Because Wizzit does not have branches, customers will open accounts using Wizzit's Wizzkid sales model, in which unemployed members of the RBN community will be trained to open and activate Wizzit bank accounts. About 30 Wizzkids have been trained already and this number is expected to top 55 in the next year.