Boom time for e-banking

Johannesburg, 12 Jul 2007

The uptake of electronic banking options is growing exponentially and will continue to do so, especially in the cellphone banking arena.

This is according to Econometrix senior economist, Tony Twine, who was today commenting on current trends in the e-banking arena.

The four big banks - Absa, First National Bank, Standard Bank and Nedbank - are all experiencing electronic banking growth rates of between 20% and 74% a year. In addition, they claim e-banking can save customers anywhere between 40% and 100% on individual transaction fees.

Twine says electronic banking is growing in popularity for a number of reasons, including that it is convenient, trendy and "arguably" cheaper.

According to Twine, it is extremely difficult to compare the complex bank pricing structures not only between different banks, but also within individual banks.

"I could phone you back in three years' time and ask you if you've figured it out yet," said Twine, explaining that this is where the current inquiry by the Competition Commission into bank pricing and pricing structures comes into play.

He notes that the availability of access to the Internet, the cost of bandwidth and customers' security perceptions will eventually "put a peg in the ground" of Internet banking, but "the banks are still a long way from saturation level".

To support this view, he quotes a recent study that indicated only 49% of bankable South Africans are banked.

Cellphone evolution

Twine foresees "massive growth" in the cellphone banking arena. "There are about 32 million cellphones out there in SA, so the potential for cellphone banking is much bigger than for Internet banking."

He explains though that about half of the 32 million cellphones would be in the hands of children or the unbankable, so the saturation point would not be quite as high at the end of the day.

Absa's GM for digital channels Christo Vrey says the bank has seen huge growth in cellphone banking. "However, there is a definite difference in the usage patterns between Internet and cellphone banking customers."

While Absa's Internet banking customers do 80% to 85% of their banking electronically per month, cellphone clients use electronic banking for 50% of their transactions per month, he notes.

Peter Schlebusch, deputy CEO of Standard Bank Personal and Business Banking SA, says the company has seen between 20% and 30% year-on-year growth in users of Internet and cellphone banking.

Lee Albertyn, head of Nedbank's virtual channels, says the cellphone service is a new offering from the bank; however, it has exceeded take-up predictions since its launch in June.