Golden age for SA banking technology
Someone asked me this week whether our banking system really is ahead of the American banks. The answer is startling to anyone accustomed to the typical tech narrative that SA lags between 18 months and five years behind US technology use.
However, in financial services a very different picture has been evident for many years. The truth is, compared with SA, banks there truly are backward and US companies are complicit in their archaic ecosystem. While we complain about, for example, an electronic funds transfer (EFT) taking a day or two to reflect in a recipient account, many US-based businesses still insist on making payments via paper cheque, which must be mailed to the payee.
For South Africans going to work in the US or wanting to interact with US companies around payment, it is pure culture shock. Later this year we will leap even further ahead, as the Reserve Bank implements a Rapid Payments Programme which will allow instant settlement of EFTs between banks.
It may be an overstatement to say we are entering a golden age for South African banking technology, but it’s not a stretch. Hardly a week goes by without some innovation in financial services changing the topography of banking, payments and lending.
FNB was a pioneer in instant “e-wallet” payments from anyone with a bank account to anyone with a cellphone number. It debuted around the same time as the revolutionary M-Pesa mobile money transfer service was launched in Kenya by Vodafone’s Safaricom, now owned by Vodacom. FNB had already been using cellphone banking for much of that decade.
Pioneering branchless bank Wizzit was one of the first in the world to enable payments via a basic cellphone, using unstructured supplementary service data, similar to SMS, but with menu and interactive capability. It has taken this and subsequent innovations worldwide.
More recently, in 2015, TymeBank demonstrated, via kiosks in Pick n Pay and Boxer stores, how a bank account could be opened and a debit card issued in five minutes. That suddenly became the holy grail of all mass-market banking services. Capitec and FNB promptly enabled quick opening of accounts via smartphone and facial recognition technology using standard selfies.
While many banks globally use such biometric authentication for logging in, SA is a leader in using it to “on-board” new customers. Michael Jordaan’s new Bank Zero uses the same technology, but goes a step beyond all others by offering zero-cost banking. Again, it is hard to find an equivalent anywhere in the world.
SA’s mobile operators are back in the fray after stumbling in their initial launches of mobile money services.
In 2018 MTN shut down Mobile Money and Vodacom shuttered M-Pesa in SA. However, MTN MoMo is back with a vengeance, using biometric sign-on and sign-in, and offering a versatile range of services at low cost. Vodacom has been building a financial services offering via its VodaPay “super app”, offering payment, lending and insurance solutions.
The loans suite includes VodaLend Compare, Voucher Advance and Airtime Advance, which function as traditional micro-loans. This week it expanded VodaLend with a service called Cash Advance to give underbanked consumers quick and barrier-free access to funds for immediate needs such as emergency doctor visits or topping up prepaid electricity.
And the Zapper QR code payment app announced users can now make instant
EFT payments at the point of sale, in one click, after linking their bank account to the app. It said it had teamed up with payments application start-up Stitch to help eliminate barriers to payment for merchants.
All these services have one thing in common that provides the clue to local leadership over the US. In Silicon Valley innovation is typically a response to opportunity. In SA and across Africa it is a response to need.