The era of mobile banking is well and truly underway,
but for South Africa’s Standard Bank the focus lies in connecting
the unbanked rural population to the financial world. Sim
Tshabalala, deputy chief executive of the bank, tells Farah Halime
how Instant Money transfers will meet the needs of the
masses.
Go deeper with GlobalData
Standard Bank,
the largest bank in South Africa by assets, has joined forces with
the Spar retail group to launch a person-to-person (P2P) money
transfer system.
The ‘Instant Money’ service will
allow customers, including those without a bank account, to send
and receive money using Spar’s 850-store network using a mobile
phone to transfer banking information.
The bank, one of the big four
headquartered in South Africa with a presence in 33 countries, is
rolling out the mobile banking product to supplement its existing
600-strong branch network in South Africa and customer base of
8m.
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By GlobalDataAlthough the service will initially
be accessible at Spar outlets in the Eastern Cape of South Africa,
the bank said it was looking at opportunities for further joint
ventures with retail groups.
Sim Tshabalala, deputy chief
executive of Standard Bank who is heading up the Instant Money
roll-out, told RBI the bank wants to achieve a “natural
market share given the competitive structure of South Africa”, but
would not disclose a target figure for the scheme.
The service is accessible “on even
the simplest mobile phone models and across all of the networks,”
but for Tshabalala, the “crux of the challenge” lies in “connecting
the poor in South Africa to the world of banking”.
“We have a large amount of people
that are outside the payments system and the financial system and
they are typically spending cash,” he said.
Tshabalala estimated that among
South Africa’s roughly 50m people, 13.2m are classed as “unbanked”;
those without an account at a bank or other financial institution
and considered to be outside the financial mainstream for one
reason or another.
He said that this figure also
represents an increase of around 10% from 2008 to 2009.
“Like all of us know, customers
want accessibility,” Tshabalala added.
“At present, financial services are
not always available in rural areas, mainly because of the expense
of rolling out banks and services in less affluent places.
“This has meant that most people in
rural areas operate on a cash basis.”
The Instant Money transfer service
will allow those that live and work in South Africa’s economic hubs
but have extended families in rural areas, to send remittances home
more easily and safely, he said.
According to market research
organisation Gartner, money transfers and payment systems using
mobile phones will be among the top 10 most important mobile
applications by 2012.
Standard Bank is not alone in South
Africa to tap into m-banking, with peers Nedbank and First National
Bank also targeting the unbanked public with their own product
offerings.
The bank’s rival Absa was also the
first South African bank to break the 1m customer barrier in
February 2009.
Nedbank
will launch a mobile banking product as part of a joint venture
with Vodacom, using the M-Pesa money transfer service, but
Tshabalala was dismissive of the rival saying they were a small
brand with less customers and limited distribution channels.
He said: “Our response [the Instant
Money transfer scheme] is more than adequate. M-Pesa may be the
main competitor for our product, but it is miniscule.”
Instead, he said the real issue in
South Africa is whether the population’s banking needs are being
met, rather than the method of moving cash around.
“There is a lot of pressure – we
have a first world banking system, we comply with the Basel
regulations, all of those wonderful things, but we’ve got 13m
people outside the system and that’s terrible,” Tshabalala
added.
“You could easily get lost in the
technology and forget the banking issue.”
The bank’s challenge is to succeed
in making banking more inclusive.
Tshabalala referred to US economist
Robert Shiller’s argument for increasing the democratisation of
finance by providing the underprivileged population with more
access to capital, the option of connecting to the markets, and
offering consumer education on banking.
Although Tshabalala admits this is
not an easy feat, he said the Instant Money transfer offers a
low-cost solution.
“The issue for us is not simply about competition [with Standard
Bank’s rivals] but how to bank these people with dignity,” he
said.
