A lack of information is holding back the potential of cellphone banking to expand access to financial services to the unbanked population.
This is one of the key conclusions of the FinScope Mobile Banking Pilot Survey, whose findings were released in Johannesburg on Thursday.
The survey confirms that there is a market for cellphone banking among the poor. There are now more cellphone users in the developing world than in the developed world. More than 800-million cellphones were sold in the developing world in the past three years.
South Africa has a high cellphone use among unbanked people: 31% of the unbanked have a pre-paid cellphone contract, and a further 17% have access to the cellphone of a friend or family member, according to data from FinScope 2006.
However, 42% of the population have never heard of cellphone banking and a further 28% do not know what it would mean in practice. This highlights one of the bigger obstacles to extending mobile banking — apart from seeing the value of using a cellphone banking service, potential customers will need to become familiar with the possibilities of the technology.
The study concludes that these perceptions must be dispelled if cellphone banking is to be adopted by a broader base of low-income people.
“The use of cellphones to facilitate effective access to financial services is a key opportunity,” said Jeremy Leach, executive director of FinMark Trust. “The FinScope surveys clearly show just how deep cellphones penetrate into low-income markets — where 36% of the unbanked in Botswana have cellphones compared to the 31% of the unbanked in South Africa.”
The aim was to find out which segment of the low-income market was using cellphone banking, why it chose to use it, and what the barriers to use were, as well as to explore perceptions about banking, technology and cellphone banking in this market.
The sample comprised 215 users, dubbed “talkies”, customers of Wizzit bank and 300 non-users, dubbed “walkies”.
The survey found that although many customers of cellphone Wizzit Bank were poor, they were not among the poorest and tended to have more income and assets and be more financially and technologically sophisticated than other low-income South Africans.
Most of the non-users surveyed knew little or nothing about cellphone banking and perceived it as expensive and complicated. Some were unemployed and saw themselves as ineligible for any kind of bank account, cellphone or other. While some of the non-user group were banked, most (59%) were not and the reasons given were lack of money and need.
“Once people start using m-banking [mobile banking], though, they are enthusiastic about its value,” said Mark Pickens, a Microfinance Analyst with CGAP and co-author of a report that drew on the findings.
“Banking needs to be affordable, convenient and trusted for poor people to access it. The study shows that for users, compared to bank branches and ATMs, m-banking is closest to their ideal way of banking. So there is clearly huge potential if we can just overcome the issue of perceptions and encourage wider adoption of cellphone banking by a broader base of low-income people.”
The Consultative Group to Assist the Poor, the Vodafone Group Foundation and the United Nations Foundation developed and funded the survey and FinMark Trust contributed in developing the methodology for the survey. — I-Net Bridge