Cellphone banking takes off

As South African consumers in both urban and rural areas use their cellphones for everything from calls to gaming, cellphone banking is gaining in popularity. The Mobility 2011 research project, conducted by World Wide Worx and First National Bank, has found that 44% of urban cellphone users are banking on their cellphones, compared to 27% a year ago.

Although rural areas lag behind, about 27% of cellphone users in smaller centres and towns have adopted cellphone banking. In total, 37% of South Africans in urban and rural areas aged 16 and above bank on their phones.

Usage of cellphone banking peaks in the 26-34 age group — at 41% — and drops to 11% in the over-45 group, the study shows. And males have been quicker to adopt cellphone banking, at 56%, as against 44% of females. While education is a factor, with 43% of cellphone banking users having matric, and 38% with post-matric qualifications, the biggest proportion of cellphone banking users — 27% — earn less than a R1 000 a month.

The vast majority of cellphone banking customers still use the basic services, such as balance inquiries (78%) and notifications (58%). But transactional services are for the first time major components of cellphone banking services, with half of respondents buying airtime, 24% paying accounts, and 17% transferring funds between accounts.

Emerging mobile commerce transactions, such as purchases and sending money to another persons’ cellphone, are also appearing on the radar screen for the first time. About 12% of cellphone banking users sent money to other individuals and 11% made a purchase via their cellphone.

For most of these services, urban respondents are far more likely to have made use of them, except in the case of sending airtime to someone: 33% of rural users of cellphone banking have done so, versus 22% of urban users.

As banks and other institutions come up with products that bridge the gap between the banked and the unbanked (like FNB’s eWallet), so customers have easier access to financial services on their phones. In addition, more than 80% of cellphone banking users are satisfied that cellphone banking is secure.

“Previous studies had shown satisfaction with security as below 60%, indicating that market education and experience has made the difference in uptake,” said Arthur Goldstuck, managing director of World Wide Worx.

All this shows that consumers are opting for convenience and control when it comes to managing their finances, which cellphones can
facilitate.

“With cellphone banking becoming mainstream, it is only a matter of time before customers begin demanding more specialised and niche services within the general spectrum of mobile services,” said Goldstuck. “While mobile money transfer is the current flavour of the moment, it is likely that mobile wallet-type applications will serve a more pressing need. Mobile money transfers filled a massive gap in the market when it was launched in Kenya, but the same dynamics did not exist in this market, hence its lukewarm reception here. Mobile wallets, on the other hand, meet a desperate need for security of money. It is a natural partner service to cellphone banking.”

The Mobility 2011 project comprises two reports — the Mobile Consumer in SA 2011 and the Mobile Internet in SA 2011. It is based on face-to-face interviews with a nationally representative sample of South Africans, conducted towards the end of 2010.

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