Cell phone banking pays off for South African bank

First National Bank (FNB) has emerged as the market leader in South Africa’s cell phone banking space, posting 1.8 million transactions valued at R200 million (US$33 million) since the launch of its mobile banking service in March 2005.

“We are proud to say that FNB Cell phone Banking is now profitable on a month-to-month basis and is outperforming all initial expectations,” says Len Pienaar, CEO of FNB Mobile and Transact Solutions.

Mobile banking is now one of FNB’s fastest growing businesses, and, with millions of cell phone users still to make their first mobile banking transaction, the scope for further market growth and technological innovation is huge.

The bank had forecast 100,000 registrations within the first 18 months when it debuted its mobile banking service on March 13, 2005.

However, it reached this target in December last year, with more than 160,000 customers registered for the FNB Cell phone Banking service.

FNB Cell phone Banking broke even in November last year, and continues to remain in a positive position.

Pienaar says FNB was the first bank to provide the most basic technology available to anyone, with any cell phone, on any network, using technology that had been patented.

“The choice of offering SMS and USSD as the primary interface for our customers, combined with the use of open source software, allowed FNB to create a cost-effective platform at a fraction of the cost of traditional mobile banking platforms,” Pienaar adds.

Pienaar attributes the success of FNB Cell phone Banking to a number of factors, including the quicker up-take by customers than initially expected, an exceptionally high transaction volume growth over the festive season and the innovative use of technology.

Transaction volumes were boosted in December by the natural seasonal trend, while the launch of the interactive menus platform in October last year contributed to a significant 27 per cent month-on-month growth in transaction volumes.

Furthermore, FNB has identified an emerging trend of customers buying prepaid air time directly from their bank accounts and this has contributed to a more than 100 per cent year-on-year growth in prepaid sales for FNB.

Customers are performing a wide range of banking transactions on their cell phones. The major driver is the purchasing of prepaid air time, which accounts for about 65 per cent of transaction volumes.

Trailing air time, purchases are balance enquiries at 23 per cent, other transactions at six per cent, and transfers and payments at three per cent each.

Transfers dominate transaction values at 46 per cent, followed by prepaid purchases at 28 per cent and payments at 26 per cent.