MXit explores mobile banking in Africa

Jaco Hattingh, CEO for MXit Africa, predicts that in Africa, where there are over 300 million adults with no access to financial services, there will be a mass move from traditional banking services, that offer savings and cheque accounts, to those that allow for person-to-person transactions through mobile devices.

“According to Gartner, 73 million transactions are expected for 2009, however there is room for further growth if we overcome challenges like financial literacy in developing countries, as well as trust issues involved with mobile technology and the related costs of accessing the internet via a mobile phone,” says Hattingh.

“This is where MXit comes in. The low data costs of operating a mobile social network and instant messenger allows banks to deliver mobile banking solutions that cost a fraction of the cost of normal data downloads through traditional mobile internet platforms. We have proven that this can work through the transactional platforms that we've provided on MXit for two of South Africa's leading banks. We've offered First National Bank (FNB) and Standard Bank clients the ability to do mobile banking solutions via MXit,” continues Hattingh.

A FNB account holder can purchase MXit Moola (MXit's virtual currency) for friends and family via the MXit platform. Traditionally, Moola could only be purchased by means of a FNB credit card or a premium rated SMS. The Standard Bank mimoney payment method is for individuals who would like to transact on a website or mobi-site, but do not have access to a credit card. mimoney clients can buy MXit Moola via mimoney without having to use a credit card.

These products are designed to meet the needs of the mobile savvy market. 40% of the South African population, even though it is considered the most developed banking country in Africa, do not have access to a bank account.

“Mobile phones present an opportunity to provide quality banking solutions for all. In developing countries like Africa, with a huge unbanked market, innovative banking and payment services like these could provide the first step towards breaking out of the poverty trap for low-income individuals. While in developed markets it simply means convenience for an increasingly mobile lifestyle,” says Hattingh.

The banking industry's growth in the African informal market is further aggravated by the tough anti-money laundering regulations set by governments which require proof-of-identity documents to be presented at a bank branch. Presenting these documents, in order to open an account, can often be prohibitively expensive for low-income customers.

“We believe that our transaction platform is an opportunity for all developing markets, not only Africa. Currently there are four billion mobile phones, but only 1.6 billion bank accounts. There is an enormous opportunity to reach the unbanked by means of mobile banking that is driven by MXit's transaction platform. Developing countries are short of both physical banks and internet outlets, so banking from mobile phones is the logical solution,” continues Hattingh.

“The ability to access money transfers, mobile communication, mobile banking, mobile payments and the reduced risk of theft is an appealing solution for individuals who want access to financial services without the worry of going in to a branch or being PC-bound,” says Hattingh.

“Banks and financial service institutions would do well to partner with established mobile social networks like MXit, with a proven record in developing business platforms for the banking sector - it will certainly address the issue of cost as transacting on the MXit platform is relatively free,” concludes Hattingh.