The co-founder of one international lead generation firm takes a closer look at the opportunities opening up in the rapidly advancing South African mobile market.

South Africa has the most developed telecommunication network in Africa, which is 99.9 per cent digital and includes the latest in fixed-line, wireless and satellite communication. According to research and advisory firm, IDC, South Africa's information technology market is expected to exceed US$4 billion by the end of 2008 and reach $5.6 billion by 2011. A couple of factors, which contribute not only to the rise in the information technology market but also to internet connectivity, is the 'wider access to broadband, ADSL and 3G … with the number of South African internet browsers increasing by 121 per cent in two years, from 1.8 million in May 2005 to 3.8 million in May 2007', according to research firm Nielsen/NetRatings.

'We experienced massive e-commerce growth at the turn of the millennium due to innovation and a surge in Internet usage. The Mobility 2007 findings illustrate that we are about to experience significant growth in the mobile market. As such, it's really exciting to imagine the impact that mobile technologies will have on m-commerce in the South African market,' said Len Pienaar, head of FNB Mobile and Transact Solutions, First National Bank.

A snapshot of the mobile market
With this growth in information technology, it comes as no surprise then that South Africa is the fourth fastest growing mobile communications market in the world. The country's three cellular network operators -- Vodacom, MTN and Cell C -- provide telephony to over 39 million subscribers or nearly 80 per cent of the population. The introduction of number portability as well as the arrival in 2006 of Virgin Mobile has helped enhance competition. South African mobile companies, likewise, are now making inroads into Africa and the Middle East, with MTN leading with over 20 operations in these emerging markets (source: SouthAfrica.info, March 2008).

Mobile banking (m-banking)
According to the Mobility 2007 study by technology research firm World Wide Worx, the penetration of mobile phone banking in South Africa has more than doubled in one year, while usage will climb even more sharply in the coming year. (World Wide Worx's latest study of mobile technology and commerce in South Africa WAS conducted in partnership with First National Bank (FNB)). 

With FNB Cellphone Banking now recording one million transactions per month, Pienaar believes the secret to success in the industry lies in strategy development:

'Acceptance of the channel across all market segments is significant and accelerating. In the mainstream market, in particular, the latest figures illustrate that it is now the most used electronic banking channel among FNB customers in this segment. To date, FNB has focused on getting the African cellphone banking market established by addressing customers' concerns around simple registration, ease of use and affordable access to the service and security. Through this exercise, we are turning the improved market awareness of cellphone banking into customer behaviour that embraces it as a convenient banking channel.'

As most would correlate mobile phone use to the 'tween to the later 30s demographic', a surprising finding of the research was that the use of mobile phones for banking services increases with age, in contrast to the usage of most advanced mobile phone functions going down as users get older. 'Urban cellphone users aged from 46 to 55 years are twice as likely to use cellphones for banking as those in the 19 to 24 age group,' said Peter Searll of Dashboard Research, which conducted fieldwork for the study.

It is interesting to note that there is a gender gap -- for now. In 2007, men dominated mobile phone banking, with 20 per cent of male respondents versus 15 per cent of female respondents having already used the channel. However, in 2008 the numbers will begin balancing out, with the same proportion of men as women intending to take it up.

What does this present to marketers looking to get into the mobile space in South Africa?
South Africans are more open and welcoming to the use of the mobile phone for personal transactions such as finances more than traditional avenues. Another example that supports this belief: through WIZZIT, a mobile banking provider, thousands of the nation's citizens are able to check their account balances, transfer funds, purchase airtime and pay utility bills via their mobile phones. WIZZIT also offers internet banking services and a MasterCard-branded Maestro debit card for retail purchases.

According to Brian Richardson, co-founder of WIZZIT, 'Mobile banking is very new -- less than three years old. WIZZIT was the first to launch and then all the Big 4 banks launched with their mobile banking offering. The model of the banks is additive in that they see the mobile as an additional/alternative channel for their already banked existing customers. WIZZIT's model is transformational in that we use mobile technology to bank the unbanked. The number of people using mobile banking must be close to 3 million people at this stage.'

In a January 2008 article published in Fortune magazine, titled 'South Africa's mobile money', the reason for the convergence of mobile and banking is that 'the accounts offer a safe place to keep money and a way to pay bills and transfer funds as easily as sending a text message.'

According to Richardson, m-banking (mobile banking) is more cost efficient than traditional banking because it is estimated that 'the cost of processing a mobile banking transaction is up to 60 per cent cheaper than traditional banking channels. WIZZIT has created a virtual bank that is not dependent on very costly bricks and mortar infrastructure and therefore we are able to keep costs down to an absolute minimum.'

As South Africa has one of the most progressive users of mobile, advertisers and their agencies should start to view mobile as a promising marketing platform to capture consumer interest. This is especially an opportune time as the 2010 FIFA World Cup will be held in South Africa -- a contributing catalyst to the growth in the mobile advertising space.

Elizabeth Lloyd is co-founder and chief revenue officer, 9Global, Inc.