SMS Use Overtakes The Web at FNB

Len Pienaar, CEO

FNB's Mobile Transactions Division

Chuck Drake, EVP of Marketing

Clickatell

Len Pienaar, CEO of FNB's mobile and transactions division, was at BAI's Retail Delivery conference with Chuck Drake, evp of marketing for SMS vendor Clickatell, to discuss lessons about mobile banking with his American counterparts. Pienaar says South Africa is seven years ahead of the U.S. market when it comes to mobile banking adoption; if so the future looks bright. At FNB, mobile is now a major revenue generator.

When did you first roll out SMS banking alerts at FNB?

Len Pienaar: We started in 2002 as a pilot, and in late 2003 we really commercialized it. And it's gone in waves. We've had cell phone banking since 1999 and the first two efforts just really didn't work. We had two attempts which were spectacular failures.

Why did your early efforts fail?

Pienaar: It's got to be simple. The customer has got to be able to use it when they pick up their phone. We tried WAP and it didn't work for us. Our market is in some instances similar (to the U.S.). We have a very sophisticated banking market, but we have a huge amount of people banking for the first time as well, so we had to cater to both sides of the market. And our real breakthrough was when we added InContact (SMS alerts) as a subscription service.

You activate it on your profile with the bank and you don't have to do anything any more. We will tell you about any movement in your bank account. We've set rules so there's floor limits and we don't tell you about interest transactions. But if you get a deposit or a credit, or if you log onto Internet banking, we send you a message through text messaging.

And where Clickatell comes in is we had to expand [the service] outside South Africa because some of our customers don't live in South Africa anymore. It became so popular that people wouldn't take our account if we couldn't offer them this service.

The second wave was really a new generation of cell phone banking service using SMS. We turned from a notification system to an interactive system. In some market segments we're now hitting 30 percent penetration.

And what are you offering now?

Pienaar: Our first offering was SMS, and our message there was if you can send SMS you can do cell phone banking. And I think similar to the U.S-though I've only been here for three days now-people were worried that it's complex, and they were worried they wouldn't be able to do it. [That was our first challenge.] So we went to market saying, 'If you can do SMS, you can do cell phone banking,' and the uptake has been phenomenal.

Our interactive cell phone banking will shortly pass our Internet customer base in the next year; we'll have more people using cell phone banking than Internet banking.

Within two, two-and-a-half years we've managed to go from zero to the Internet base. And the growth rates are superb; we're growing at about eight, nine percent month on month.

And the second challenge was security. I think people were very scared, [similar to] when Internet banking started; people didn't trust their ability to [move money]. So we slapped on a money-back guarantee. If you lose money, we'll reimburse you.

What are your most popular features?

Pienaar: In South Africa, pre-paid services are massive. We don't have contracts for cell phones, you buy airtime as you need it. Electricity works the same way. So that was a hook for us early on. People would come in to top up their cell phone. Within a month they start balance inquiries.

Chuck Drake: I think what's most relevant for the U.S. market is all the activity at a bank's call center [for balance inquiries] about the time of the month that somebody's paycheck arrives. Len and FNB figured out a long time ago to push that out as a balance status message; that reduces the call center inquiries and tells people real time their balance status.

What technologies do you utilize?

Pienaar: The scary thing is what we use is part of the original GSM spec. So we're not using new technology, and yes, I think it's eventually going to go that way. But our start line was 'Any cell phone, any network.'

How has your mobile banking strategy evolved?

Pienaar: When we started eight years ago, it was to just tick off another channel. It's changed in the last years [and now] this is a major source of revenue for us. We get paid for any pre-paid sales we do on the cells, and in South Africa we actually charge for every transaction.

For us it's an acquisition and retention tool. Once you have InContact you will never use another card again. We find that people-and it's very difficult to prove-people take our card more often out of their wallet than other cards. But you've got to package it right. We spend probably the same amount on advertising as we spend on technology. (c) 2007 Bank Technology News and SourceMedia, Inc. All Rights Reserved. http://www.banktechnews.com http://www.sourcemedia.com

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