The Juice department at MCB.
The most banked country in Africa, with close to 90% of all adults owning bank accounts, did not crack financial inclusion by accident. It has been nurtured.
Patrick Grondin, cards business executive at Mauritius Commercial Bank, got his first Rupys account when he was just a kid. His parents opened it for him.
Today, his four- and two-year-old daughters each have their own account, continuing the family tradition.
“As from birth you get a Rupys account,” Grondin says. “It grows affinity with the bank.” And so it is with many Mauritians.
According to the Global Financial Index (Findex), Mauritius is the most financially inclusive country in Africa, with over 80% of its adults having bank accounts — far ahead of closest competitors South Africa (54%) and Kenya (42%).
Old lender, new game
Even more impressive is the use of bank cards in the sugar cane growing nation of 1.2 million people.
Grondin estimates that the ratio of bank account holders to those owning cards to be 1:1.
With over 90% of Mauritian retailers wired to swipe cards, about 50% of all transactions in the country are done via cards; the remaining 50% are in cash.
Globally, 85% of all transactions are still done in cash and cheque, placing Mauritius firmly ahead of most in achieving the goal of a cash-lite economy by the year 2020 that the World Bank and other Financial Inclusion players have set.
The Mauritius Commercial Bank (MCB), the oldest lender in sub-Saharan Africa is by far the biggest player on the island, both in terms of account holders and the cards business.
Binesh Mangar, head of cards at MCB, estimates that the bank’s cardholders have close to 65% of all cards held in the country.
But with technology changing fast and the entry of mobile network operators into the payment business, he is having to craft a new strategy to maintain his market share while moving the bank into the new age of mobile banking.
Enter Juice
Sitting in his eighth floor office of the MCB building in the Ebene business hub outside Port Louis, Mangar oversees eight different teams including Analytics, Fraud, Finance and Re-engineering. He has added another: Juice, a mobile payment solution.
A mobile application that is freely downloadable, Juice runs independent of the mobile network and allows ATM withdrawals, money transfer, point-of-sale payments for goods and services and internet banking.
Mangar sees Juice as an extension of the card business.
“At one point we thought they were different industries,” he says. “But they have a similar business model. The card and Juice are coming together very tightly. Juice is a card in the phone.”
Mangar has given the issue of convergence of the two businesses a lot of thought. He believes banks still have the edge over mobile network operators (MNOs) when it comes to mobile finance, but it will take a lot of effort to stay ahead.
“If you think about it, banking is about two things: payments and lending/taking deposits,” Mangar says. “Juice takes care of the payment bit.”
Faced with competition from Orange Money, Mangar draws up a list of battles that have to be won before the banks or MNOs claim victory.
He refers to the battle developing between Kenya’s MNO Safaricom, which runs the M-Pesa financial service and Equity Bank, with its Equitel mobile money product that is being closely watched by bankers and MNOs alike.
“For me there are five competition points,” Mangar says. “First there is the brand, and there as MCB we have an edge.”
This has helped in the enrolment of Juice agents in the villages. Shopkeepers approached to act as agents recognised MCB and were happy to be seen as its representatives.
“The MCB brand has helped open doors,” Patrick Grondin says. “If we had sold Juice as a brand by itself they would have said ‘maybe later’. But to be seen as a representative of the bank in a small village makes them feel good.”
Technology front
The second competition point that Mangar sees is technology, where MNOs have had the edge since they constantly update their systems, unlike banks where systems are updated only every few years.
The bank nonetheless sees opportunity in the number of mobile internet users to push Juice.
“In a population of 1.2 million with 800?000 adults, we have 450?000 mobile internet packages,” he notes.
And while internet prices remain high (Juice only works when one has internet data) the Mauritian government is planning to roll out Wi-Fi all over the island.
The third issue, Mangar reckons, is marketing budgets. Here, he feels MCB will have an advantage and mentions an end-of-year marketing campaign blitz that the bank will run about Juice.
“The fourth is the network. Mobile operators tend to have the advantage since they can extend to places where banks do not have a presence,” Mangar points out.
Finally, he sees the customer base as important in winning the fight.
Juice could have one other advantage — it is currently not set up to make money, while competitors have to watch the bottom line.
“Right now we are not making agents pay,” Grondin notes. “We are confident that they will be happy to pay once they feel there is a critical mass.”
Juice has 900 agents currently at gas stations and shops as well as at ATMs. Among the most frequent uses of Juice is purchase of gas at pumping stations.
The bank plans to grow the number of agents to 2?000. Rivals Orange and EMTEL have a combined agent network of 5?000.
Juice is still in phase one, Mangar says. In future, he says the product could support augmented reality.
“You might walk into a car dealership, view a car, the bank knows your salary, you ask Juice, can I afford this car?”
Juice would then calculate likely loan repayments, contact the bank manager who would then call the vehicle dealer and tell him the purchase can be financed.
Meanwhile, on the ninth floor, just below the executive management meeting rooms, a small team of programmers are coding the next iteration of Juice — Phase two.