By Jennigay Coetzer – Business Day, 30 July 2010

Mobile banking offers a convenient way of transacting from anywhere at any time, and can be delivered at a lower cost to the bank. “But if a bank is not offering a good price, customers will move to one that is, especially at the lower end of the market,” Simon Russell, managing executive for financial services at Accenture South Africa.

He says one a major challenge for the larger banks is that, typically, 60% of their costs are in their branch and ATM networks, and their internet and mobile banking products have to be integrated with this complex infrastructure. But smaller banks are more agile and can use low cost mobile banking offerings to take business away from their bigger competitors and expand into other areas later.

In South Africa, there is the mass market at the one end, where customers would benefit from simple mobile banking transactions, and the more sophisticated customers at the other who view mobile banking as just another transaction channel, says Russell. The potential take-up of mobile banking is bigger among those that do not want to walk long distances to the the nearest bank, and do not have access to internet banking, he says.

“Those at the higher-end of the market have more choice.” A well thought out offering, a flawless launch and an innovative marketing approach are key to the success of a mobile banking product, says Russell.

He says the Spanish bank Bankinter is offering a service whereby when customers buy high value items in retail shops, such as a TV, and the retailer swipes their card they receive an SMS offering them a short term loan to finance it. If they accept, the money is then transferred from their account to the retailers account.

As a marketing ploy when launching the service the bank sent customers that had a positive balance in their account an SMS asking them what interest rate they would like for investing this money. “The bank agreed to some of the most outrageous responses and got amazing publicity from it at a low cost,” says Russell.

Bankinter has become a market leader in mobile banking in Spain by gathering data about customers and delivering products through the most appropriate channels. Mobile payments have been available for some time in South Africa, but customers are spoilt for choice due to the high penetration of branches and ATMS, says Russell.

“In SA there are 12 branches and 17.5 ATMs per 100,000 people compared to Nigeria, where there are below 5 branches and 5.2 ATMs per 100,000 people.” He says the future will see mobile electronic wallets on the phone that can have money loaded onto them that could be used to buy items from vending machines, pay for parking, and make person to person payments, without transacting online with the bank while making payment.

Jennigay Coetzer is a freelance business and technology journalist. She also does media spokesperson training and article writing skills training.

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