Published in The Banker
Saturday, October 01, 2011
Absa’s head of digital channels talks about the motivation behind a recently launched service allowing customers to electronically transfer money via SMS to anyone with a working mobile phone.
As well developed as South Africa’s banking system undoubtedly is, some aspects are still lacking. More than 50% of the population still has no bank account, for example. Huge swathes of the population opt to stuff their hard-earned rand under mattresses, or, in the case of the country’s many migrant workers, distribute earnings back home via inherently risky physical channels.
As with many developing countries, however, mobile phone penetration rates in
South Africa far exceed those of banking services; the figure actually broke the 100% mark back in 2008.
For Absa, South Africa’s largest consumer bank, this striking disparity gave rise to an opportunity to make some of the functions enjoyed by banking customers available via the prevalent mobile phone.
The result was a service, dubbed ‘Cash-Send’, which allows Absa customers to electronically transfer funds remotely from an ATM, mobile phone or online banking platform by sending an access code to the recipient via SMS. This can then be used to withdraw cash from one of the 5800 Absa ATMs across South Africa.
Moving money
Enabling migrant workers based in towns and cities to send earnings back to unbanked family members in rural areas without the risk and expense of couriering was a key motivation for the project, says Christo Vrey, head of Absa’s digital channels. “They [workers] will typically give somebody cash and it
will then make a very dangerous journey to get back to their families. This [CashSend] enables them to get their hard-earned salaries out to family in rural areas in a much more managed and secure manner.”
Security has been crucial to the project from its inception, says Mr Vrey. “There was definitely great consideration [paid] to the risk side and the security side... We had big discussions with our Reserve Bank to make sure we did not unintentionally make a channel which will be misused for a variety
of other purposes.” Security precautions include placing limitations on the actual value and the number of transactions possible, as well as dual SMS notifications and single-use passwords.
Mr Vrey estimates that the service is typically 50% cheaper than typical bank transfers, due to the reduction in labour and processing costs. But for recipients, the biggest advantage might be the process of shifting the transactions out of the branch and onto ATMs. “In rural areas, people have to travel very long distances to get to our smaller set of branches,” he says. “And you get into something of a monthly situation where salaries are paid, and as a result, queues of recipients
in the branches can be incredibly long. Very often you can find yourself in a position where you will get to a branch at a month’s end and you will have to spend a whole day standing in the branch queue.”
Rapid uptake
Uptake so far has been brisk, although it is far short of Absa’s targets. The bank’s total customer base numbers more than 11.5 million, and Mr Vrey estimates that between 1% and 1.5% are currently using CashSend, generating about 110,000 transactions per month.
Comparatively small numbers perhaps, but they are increasing rapidly. As of April 2011, the value of each transaction has increased by 159% when compared with the same time the previous year, while the total number of transactions has jumped 203%.
Mr Vrey is confident that this strong growth will continue. “Total users are a very small percentage [of total customers]... If I look at the number of transactions I can safely see we’re really only touching the tip of an iceberg here.” He predicts that the number of users could easily reach 500,000 in the coming 12 to 24 months.
Project expansion
This growth should be boosted by Absa’s efforts to expand CashSend’s user base to other market segments, in particular recently launched services allowing business users to distribute messages and payments to multiple recipients.
“As a small business, for example, you will either have the weekly or a monthly task of allocating salaries,” says Mr Vrey. “The need for cash in these markets is very important, so we have implemented a tool allowing business owners to make their salary payments via CashSend. It can then be collected at the employee’s convenience, or whenever they feel secure to go to the closest Absa ATM.” CashSend has also been used by some large corporate customers to distribute prize money in large-scale competitions, he adds.
The technology underpinning CashSend was supplied by payments system firm ACI Worldwide, and Mr Vrey describes it as “the engine room at the technology and architecture level”. The system as a whole may eventually be used more widely across Absa’s parent Barclays Group, Mr Vrey says, potentially opening up the possibility of CashSend allowing international as well as local remittances.
“We are looking at…. how this feature could be cross-utilised across other geographies… When you look at something that you build yourself, you would like to see it being reused,” he says.