Now, in 2009, the picture is completely different. Mobile banking has become the largest electronic channel for two of the largest South Africa banks. Both ABSA and FNB have reported customer bases of over a million customers each. Mobile services have expanded from account queries to payments for virtual goods. Players in the market are aggressively developing new innovative applications. It can no longer be disputed that mobile banking and mobile payments are changing the face of financial services, not just in South Africa, but across the globe.
FNB pioneered mobile financial services with the introduction of their account notification service InContact. Over 67 million SMS messages are now sent to their account holders per month. Having launched FNB cellphone banking in 2005, the service now attracts over 45 000 new customers a month. As at the end of February 2009, FNB reported 1.29 million customers registered, processing close to 4 million transactions through their various interactive cellphone banking services, transactions worth R600 million.
Though various different models have been launched, FNB is widely regarded as the industry leader. As such, it has learnt some interesting lessons along the way which are detailed in the following paragraphs.
1) Technology alone cannot guarantee success
It is easy to fall into the trap where mobile technology is seen as the key differentiator to a good mobile banking offering. Many debates centre around the type of technology to deploy, yet technology should be seen merely as an enabler of a customer centric product. Focus should be put on identifying and meeting customer needs, ensuring an efficient and customer-friendly process from registration to query resolution, It is the three “P's” (product, process, and people) that create a good solution, and not the technology that is used.
2) Good product design is crucial
The body of knowledge around good mobile user interface design has increased substantially in the last couple of years. Crucial lessons are to keep the interface simple and ensure the functionality matches the needs of the target market. It is important to apply the best user interface designs and information architecture is possible.
A tough lesson learnt by FNB was the fact that if a customer cannot use the service on first attempt, they will not return to try it again. This also applies to registration processes. With every barrier to entry that is placed before a customer, you can expect a drop-off of potential customers. Product design must also take into account the fact that every market is unique. FNB's mobile banking solution caters for the vagaries in each of the African markets in which it operates.
3) The needs of the market will dictate the choice of technology
One of mobile telephony's key strengths has been the various technology choices that are on offer to communicate with customers. Bearer channels include basic SMS, the ubiquitous USSD and the packet switched world of mobile internet on GPRS or 3G. Handset based applications such as J2ME, Symbian and STK provide even further options to enrich (or is it confuse?) the market.
There is no single technology that can be seen as the best for mobile banking. What is important is to provide the right product on the right technology for the specific target market segment. In developing markets, USSD has proven highly successful as it is supported by all handsets without any complicated downloads. However, in developed markets with substantial penetration of high-end phones, mobile internet based solutions may be a better option. The key lesson is to match the technology to the handset and user capabilities of the target market.
4) Regulation should incubate, not inhibit
Increasingly, regulators are entering the debates around mobile banking and mobile payments. As an accountable institution, FNB fully supports the need to protect against fraud, money laundering risks and credit exposure. On the other hand, the industry needs to find a middle ground that mitigates the risks, but allows banks to service a segment of the market that could currently be inhibited through onerous regulations in place. The onus is on the banking industry to find this delicate balance through active engagement with regulators to create collaborative solutions.
5) Education
Lastly, it is vitally important to create targeted and effective education of customers. This relates to product awareness, product education and security. As the industry-wide advertising spend on mobile banking increases, the general public becomes more familiar with the solutions and functionality available. Combined with collaboration and standardisation, mobile phones have the potential to become the most powerful channel for financial transactions in the future.
Mobile banking has moved from a “first to market” product to a significant transaction channel, with millions of transactions being reported. Major customer awareness and education campaigns have been undertaken by all stakeholders, and this is paying off at an industry level. As a last lesson, the success of mobile banking as an industry is completely dependent on the ability of the industry players to create strong collaborative relationships that benefit the industry as a whole. This includes the banks, the mobile operators and the regulators. Ongoing conversations between all stakeholders are required to take the mobile to the next level.
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