“In the next three to five years the vast majority of our transactions will be performed on smart-mobile devices.” Retail banking is experiencing a seismic shift in customer behaviour thanks to the digital revolution that continues to effect fundamental changes in the way businesses and individuals transact. Nowhere is this metamorphosis in customer behaviour more profound than in Africa.
While much has been written about the rise of Africa’s middle class, which is expected to reach half a billion people by 2030, less is known about the extraordinary growth in mobile and broadband penetration on the continent.
An Ericsson Mobility report shows that mobile subscriptions in sub-Saharan Africa will rise to 930 million by the end of 2019, from 635 million at the end of 2014. To put that growth in perspective, there were less than 2 million mobile phone users in Africa in 1998.
Sub-Saharan Africa’s mobile penetration rate of 70 percent is also rapidly closing in on the global average which stood at 92 percent in 2013. According to the Mobile Africa 2015 study by GeoPoll and World Wide Worx, internet browsing via mobile smart devices now stands at 40 percent across the core sub-Saharan Africa markets of South Africa, Nigeria, Kenya, Ghana and Uganda. We expect internet browsing via smart mobile devices to grow exponentially as data costs in Africa decline.
Already we are seeing huge investment in data by mobile operators, municipalities, malls, retailers, banks and private companies across the continent. Standard Bank has installed free Wi-Fi in many branches across South Africa and plans to expand that to the rest of the continent in the near future. Municipalities such as Stellenbosch are already providing free Wi-Fi to their citizens while a cursory glance at the financials of any mobile operator in Africa shows that the bulk of their revenue growth is coming from data rather than voice services.
The implications this has for financial services companies will be profound. Just as much of sub-Saharan Africa leapfrogged fixed-line telephony and progressed straight to mobile telecommunications, so too will many individuals on the continent skip the traditional branch-based banking paradigm and move straight to mobile transacting.
This is particularly pertinent given that the African Development Bank (AfDB) estimates that 80 percent of African households don’t have bank accounts. We believe that the advent of mobile banking will radically alter that figure in coming years.
The Ericsson Mobility report indicates that 58 percent of sub-Saharan Africa mobile users are interested in using mobile banking and mobile wallets. That represents a massive opportunity for banks that are willing to embrace new technology as a means of meeting the basic customer need for ease of access, convenience and 24-hour availability.
Of course, this will require that banks make a radical shift in the way they view mobile banking. One can no longer simply view mobile banking as one of many channels to supply financial services to customers. Banking in Africa needs to be premised on the “always-mobile” concept.
Standard Bank’s mobile transactions are already growing at more than 50 percent a year in terms of the volume of transactions. In the next three to five years the vast majority of our transactions will be performed on smart-mobile devices.
Our belief that the future of banking in Africa will be mobile is underpinned by the fact that the three main impediments to mobile adoption – handset affordability, data costs and mobile banking security – are on the cusp of being eliminated.
Smart mobile devices are already available for less than $50 (R607). The propensity of many customers to upgrade their smart mobile devices every one to two years has also resulted in a large supply of used devices that are typically handed down to family and friends or sold on the second-hand market for as little as $30, effectively removing one of the biggest barriers to mobile banking adoption.
The rapid evolution of mobile security measures such as biometric recognition and security has also radically improved perceptions about the safety of mobile banking. Standard Bank can say with confidence that our mobile banking platform is the safest channel we have.
Our technology is able to use fingerprint scanning as well as SIM card and device verification before processing any payment. Combined with the use of text messaging to inform clients that a transaction has been performed, our clients are able to enjoy immense confidence in the security of our mobile banking platforms.
Although Ericsson Mobility says that 47 percent of sub-Saharan Africa mobile users still feel that mobile data is expensive, Standard Bank’s view is that the continent is facing a data revolution that will radically alter the future of banking across the region.
The large scale investment in data that we are witnessing across the continent at the moment will result in a dramatic drop in costs in the near future. That will make transacting and banking on mobile devices the preferred option.
That is why Standard Bank has invested heavily in introducing revolutionary mobile payment solutions such SnapScan, MasterPass and InstantMoney as well as our mobile app. The increasing societal shift towards a cashless society has already seen over 12 000 merchants and more than 200 000 customers sign up for SnapScan while Instant Money has processed more than R6.5 billion of money sends from person-to-person in South Africa alone.
That’s not to say that card-based payments will disappear completely, but rather that they will increasingly be integrated into mobile platforms. Customers can already load their card details onto mobile apps, thereby enabling them to make payments with their mobile device without ever having to retrieve their credit cards from their wallets.
Standard Bank’s partnership with Snapscan enables our mobile payments app to automatically communicate with iBeacons using Near Field Communication technology. That way if a customer is about to conduct a purchase in a shop, the Standard Bank app will automatically inform the iBeacon of its presence and begin loading the impending transaction details for payment authorisation. This will allow customers to transact via their mobile phones without having to wait in queues to access till points.
These initiatives are all central to our strategy of placing the customer at the centre of our banking universe and providing fast, convenient and “always-mobile” banking solutions that can essentially be carried around in our customers’ pockets.
One of the key differentiators of the new Standard Bank app, apart from biometric security, is that it provides customers with a single-view platform for all our service offerings. That enables customers to access their business and personal accounts as well as insurance, wealth management and trade shares easily on 29 stock exchanges around the world via a single 24/7 smart mobile interface.
Our customers across Africa are changing and we are proactively changing with them. Those who don’t build now for the future will miss the digital wave and the opportunities that it brings.
* Peter Schlebusch, Standard Bank Group, Personal & Business Banking chief executive.