South African bank, telecom team on mobile banking

Standard Bank and MTN last week launched MTN Banking — a mobile, person to person banking platform. MTN Banking is a 50/50 joint venture between the two, which sees Standard Bank providing the banking infrastructure (and licence), and MTN the telephony/SMS system.

The first product launched under the MTN Banking umbrella — MobileMoney — is effectively a savings account that can be accessed via cell phone or a card freely available from MTN/Standard Bank. It has a balance limit of R25,000 (US$3,896) per month, and withdrawal limit of R5,000, putting it under the threshold for FICA requirements, so new customers do not need to verify themselves at a branch.

The account behaves in the same way as any other, as will all transactions — in other words, you do not have to be an MTN Banking customer to transact with other customers.

The MTN banking application is embedded onto the SIM-card for new starter packs — meaning that each new MTN customer automatically has an account application form on their phones. Existing subscribers can download the application.

Registration is simple, and involves verifying the user’s cell phone number, and inputting ID numbers and a PIN code. Once done, the user phones the MTN Banking call centre, answers four questions, and the account is activated.

Transaction fees are deliberately low (R1 for a balance enquiry, R3 for a payment and R5 for a cash withdrawal) and there is no monthly subscription fee, as the companies are targeting new customers and new revenue streams with this venture.

The deal, say the companies, was two years in the making, and the new venture has cost some R50 million to set up, much of which will be spent on marketing and advertising. Standard Bank Retail Banking MD, Peter Wharton-Hood, says the company hopes to attract some 350,000 users to 500,000 users this year, which will enable it to break even.

The partnership, says Irene Charnley, commercial director: MTN Group, is Pan-African, and the parties are looking to extend MTN Banking into the African territories in which they operate. Although a time line was not provided, Charnley says that this will happen as soon as it is feasible.

“We believe the partnership will result in increased data traffic, a new revenue stream and provide substantial competitive differentiation for MTN,” says Charnley.

Jenny Hoffman, previously of Theba Bank, has been appointed CEO of MTN Banking. Hoffman says that this is merely the first of the new bank’s offerings, and that more will be rolled out once a client base has been established.

Standard Bank’s Herman Singh dismisses concerns around unreliable SMS delivery, saying that MTN Banking traffic has priority to ensure that all messages are delivered.

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