The battle of the banks for the cellphone banking market is getting into full swing with Absa coming forward with a high–profile mobile banking campaign offering free cellphone banking for six months.
Although Absa was the first bank to introduce cellphone banking in August 2000, the product was in many ways ahead of its time because cellphone technology was unable to deliver a fully-fledged banking product.
“The proposition suffered due to the lack of capability as the bulk of the market did not have 32K SIM cards or compatible phones,” says Christo Vreys, general manager of Digital Channels at Absa.
Five years on, however, the opportunity is ripe to offer customers safe, convenient and cost-effective banking from their cellphones.
The media campaigns by both FNB mobile banking and MTN Banking have helped to highlight the bene-fits of using one’s cellphone as one’s mini-bank in the comfort of one’s home or office. This has no doubt contributed to the rapid growth in Absa’s cellphone banking over the past six months, with 4 700 new customers signing on last month, compared to 1 800 a year ago.
Apart from offering free trans-actions and free banking SMSs for Vodacom subscribers, Absa has also updated its offering, which is very similar to the MTN Banking product. Like MTN Banking, Absa offers a SIM-based menu, which requires a 32K SIM card, and is only available on Vodacom and MTN networks. FNB offers both an SMS-based transaction process, which works across all networks, and a phone menu download each time one does a transaction. The phone menu is not available, however, on the Cell C network.
Because Absa allows higher value transactional levels than MTN Banking, it does mean that one has to go to a branch to activate one’s account to allow one-off payment transactions. According to Vreys, customers have been known to transfer up to R500 000 in one cellphone transaction.
Absa’s freebie is only on offer for six months, after which time, Vreys says, Absa will review the situation. It may then revert to normal banking charges, which are R1 for a balance enquiry and a sliding scale for payment transfers. For example, R400 costs R2,76 up to a maximum fee of R11,50.
The 70 000 existing Absa cellphone customers are predominately in the middle-income bracket. But the percentage of cellphone banking customers is higher among entry-level customers than in the more affluent market.
“We find that the mass market is still cash-driven but information is very valuable to them. They use their cellphones to find out balances and see if social grants have been paid to them rather than spending the money on a taxi going to a branch or ATM.”
Now that the offerings are so similar, for people who already have a bank account with either Absa or FNB, it may make sense for them to sign up for their existing bank’s product. Both MTN Banking and Wizzit, a cellphone banking product launched last November, offer products that do not require customers to go to a bank to open an account, which should make them a more attractive option for the unbanked.