Data wars: banks evolve to drive digital inclusion

Banks are coming to the data party to bridge the digital divide, but they still have a long way to go to satisfy their customers

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In a bid to encourage digital banking, banks are starting to play in the mobile virtual network operator (MVNO) space, and in a country where connectivity is the key to economic development, data is their biggest competing point. But are consumers getting the short end of the stick?

Capitec Connect is the latest market entrant with a prepaid solution for voice, data and SMS, offering rates of R4.50 per 100 megabytes or R45 for 1GB, which is on average 50% below the normal market price. The bank has made much of the fact that data will not expire provided the SIM is used at least once in six months. However, in April this year, the Independent Communications Authority of South Africa proposed draft regulations stating that all airtime and data should remain valid for a minimum of six months. And although the other bank MVNOs do offer data packages that do not expire, these are almost twice as expensive as those with shorter expiry dates.

Clearly this market is nothing to be sneezed at. FNB raked in a R1-billion turnover for the year to June from its MVNO offering alone.

Gerrie Fourie, CEO of Capitec, says South Africans have been complaining about the cost of data being expensive and complicated. “Bundle pricing, off-peak and peak rates, and the fact that your data expired are all things that make no sense. We’re changing this by giving our clients access to a mobile solution that is simpler to understand and much more affordable, and that can be recharged easily on our digital channels.”

The Capitec Connect solution piggybacks on the Cell C network in much the same way as FNB Connect and Standard Bank Mobile do. SIM cards are available to clients at all Capitec branches and clients can get up to five SIM cards linked to their profile, which makes it easy to give family members access to data and airtime. Once the SIM is activated, data, minutes, SMSs and airtime can be topped up on the Capitec banking app, using *120*3279#, or via internet banking. Calls are charged at 90c per minute, whereas SMSs cost 25c.

“It is through partnerships such as the one between Capitec and Cell C that we can make a major difference in bridging the digital divide that still exists in our country and we’re very pleased to be part of the solution that enables South Africans to access a digital lifestyle that can truly change their world,” says Cell C chief executive officer, Douglas Craigie Stevenson.

Bradwin Roper, chief executive of FNB Connect, welcomed the launch of

Capitec Connect, saying the great digital divide is a country problem. “We estimate that between 40 and 50% of South Africans don’t have smartphones. This barrier is specific to rural geographies. It’s all good and well to say data must fall but consumers also need a mechanism to connect. According to the World Bank, if you get 10% more citizens connected on a smartphone, that translates to a 2.5% increase in the country’s GDP,” he says.

For the year to June 2022, FNB Connect, which has been in the MVNO space for eight years, registered more than 878,000 active SIM users and noted a 126% growth in smart devices year on year. Roper says FNB Connect data shows that clients with devices typically use a minimum of 5GB a month, which is why FNB Connect recently launched LTE offers, which allows clients to buy 5GB for R89. “The need for data has grown exponentially, but typically what we observe is that clients who use 2GB of data or less usually use it up quite quickly and then top up, so we don’t see expiry dates as an issue,” Roper says. FNB’s data offers usually expire after 30 days but the bank incentivises clients to buy data with shorter expiry dates at cheaper rates. For example, 1GB valid for one day will cost you R49, whereas 1GB valid for seven days costs R55 and 1GB valid for 30 days will cost R59.

Standard Bank Mobile has allocated airtime and data worth more than R200-million to clients. The bank says 2023 will see clients being able to redeem UCount Rewards points on Standard Bank Mobile contracts.

“We will also be expanding our device range and termed contract options to cater for a wider base of customers through the introduction of tablets, laptops and other connected devices across different brands,” a bank spokesman told DM168. “More SIM plan options will also be introduced to satisfy our customers’ usage needs. Last but not least, small-enterprise customers will soon be able to take advantage of the Standard Bank Mobile offering as we will be opening up the solution to this base in the near future.” Standard Bank Mobile offers data that expires after 30 days and data that never expires at almost double the cost.

Although TymeBank is not yet in the MVNO space, it does offer clients options via its partners, Boxer and The Foschini Group (TFG), both of which have an MVNO offering. Greg Illgner, TymeBank’s chief strategy officer, says clients can already buy Boxercom airtime at a preferential rate and the bank will soon be adding preferential deals on TFG’s MVNO as well.

MTN rapped on knuckles for misleading advertising

In the same week that Capitec Connect launched, mobile operator MTN received a public reprimand from the Advertising Regulatory Board (ARB) regarding data that is advertised as valid for “one day” but actually expires at midnight. Complainant Christo Boshoff had purchased a 2.5GB data bundle valid for one day at 12.51pm, expecting it to last for 24 hours. However, the following morning, the data had disappeared. When he complained to MTN, he was told that “when the data is valid for a day, it means that when the day ends at 00.01, the data will then expire”.

The ARB found that the advertising was ambiguous because some consumers might understand that the “day” ends at midnight and others might understand it to last 24 hours from purchase. MTN was ordered to either withdraw or amend the “one-day data bundle” advertising.