CASE STUDY: Mobile Banking in South Africa
An estimated 16 million low income South Africans (48 percent of adults) do not have bank accounts. For many, bank fees and the challenge of getting to and from financial service institutions puts formal bank accounts out of reach.
Now, through WIZZIT, a mobile banking provider, thousands of the nation’s citizens are able to check their account balances, transfer funds, purchase airtime, and pay utility bills. WIZZIT also offers Internet banking services and a MasterCard-branded “Maestro” debit card for retail purchases.
To set up a WIZZIT account, one need only subscribe to the service and deposit funds into their account by going to a bank or post office. A WIZZIT account costs roughly one-third less than a traditional bank account.
Rather than rely on traditional advertising, WIZZIT markets its services through a growing team of Wizz Kids, typically unemployed college students who earn a commission through signing people up for the service. Subscribing takes just a few minutes and can be done by punching basic information into a telephone keypad.
Subscribers pay the rand equivalent of roughly US$5.25 to sign up and an additional US$.15-.78 per transaction, with no monthly fee for use of the service. WIZZIT does not require customers to have a bank account and can be used with early generation phones.
A recent study of mobile banking among low income individuals in South Africa found that a majority of WIZZIT customers sign up because it’s cheaper to use than traditional banking, is convenient, and safe. The study, “Mobile Phone Banking and Low Income Customers: Evidence from South Africa,” is based on surveys of 515 low-income South Africans, including 300 who do not use m-banking and 215 WIZZIT customers. It was carried out through a collaboration among the Consultative Group to Assist the Poor (CGAP), United Nations Foundation (UN Foundation), and the Vodafone Group Foundation (VGF) and can be accessed at: www.cgap.org/publications/mobilephonebanking.pdf. The study also highlighted the need to address negative perceptions about the cost and effectiveness of mobile phones and m-banking.
How it was done
WIZZIT was founded by Charles Rowlinson and Brian Richardson who received assistance in researching the concept from FinMark Trust, a donor organization focused on bringing financial services to the poor. The study found that it took 58 minutes for the average South African to access a financial services point. Given the difficulty of bank accessibility and cost of traditional banking, Richardson and Rowlinson started looking at mobile banking as an alternative, especially in light of the large number of South African cell phone users (estimated at 28 million). After being rejected by a number of larger banks, the two launched their service in 2005 through a partnership with the Bank of Athens.
Technology used
WIZZIT uses a technology known as Unstructured Supplementary Services Data (USSD), supported by all GSM phones.
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