The widespread use of prepaid services by South African households has thrown up lucrative business opportunities for banks to bring previously un-banked people into the financial services loop.
The cellphone, once used only to make calls, has evolved into a multi-purpose device which First National Bank (FNB) is using to provide prepaid electricity, telephone and cellular phone services to people in even the remotest of areas. This follows on the bank’s success with selling prepaid airtime at the ATMs.
FNB says it has recognised the huge uptake of cellphones in South Africa, estimated at about 30-million users, and invested heavily over the past two years towards a technology that enables people to transact using any cellphone device on any mobile network.
This investment has seen the bank increasing its banking footprint in the mainstream market, which makes up almost 60% of FNB cellphone-banking users.
Only cellphone airtime was available on the prepaid services menu when the bank launched cellphone banking in March 2005, in addition to normal banking transactions like transfers, balance enquiries and payments.
And for Len Pienaar, CEO of FNB Mobile and Transact Solutions, this is a significant achievement in the bank’s efforts to use innovation to increase the penetration of banking services in historically neglected areas in a cost-effective way.
Prepaid electricity and Telkom airtime — introduced in April 2006 this year — is increasingly becoming a key cellphone banking volume transaction driver.
FNB data shows that more than 50% of daily cellphone banking transactions are for the various prepaid purchases, with the Western Cape’s widespread use of prepaid electricity now makes a noticeable contribution to transaction volume growth.
FNB transaction volumes stand at about 700 000 prepaid purchases a month — and is still growing rapidly. This is up from 400 000 in August last year.
More than R12-million worth of prepaid services were purchased on FNB’s cellphone banking channel in August this year, a phenomenal growth of R7,2-million from R5-million during the same month in 2005.
FNB’s total cellphone banking transaction volumes stood at 540 000 and had a transaction value of more than R80-million in August this year.
Pienaar says cellphone banking is set for continued growth in the mass market in 2007 as service providers focus on solutions which offer ease of use, low hardware requirements in terms of handsets and services which are affordable for the average South African. – I-Net Bridge