SA driving the mobile revolution into Africa

The technology driving this evolution, designed by South African banking and mobile commerce software company Fundamo and commercially deployed by companies in South Africa, Botswana, Zimbabwe, Zambia and the DRC, enables secure financial transactions to be effected via mobile phones, initiating Africas shift into the world of realtime financial mobility. The past 18 months have seen a significant leap in the evolution of mobile transacting with the penetration of GSM and the willingness of banks across the continent to enter the mobile space, says Hannes van Rensburg, CEO of Fundamo. The enablers driving mobility are steadily taking position, the distribution networks are being put in place and the infrastructure is stabilising. Without these three factors in place, the very concept of mobile banking on the African continent would never be a reality. Banking institutions also have a crucial role to play in the enablement of financial mobility in Africa. An increasing emphasis on the importance of mobile transactional banking and financial switching has been a substantial catalyst in the continents mobile evolution. Africa is primarily a cash-based economy. Cash is problematic, not only for financial traceability in banking institutions, but for the average person on the street. Mobile transactions have a host of advantages over cash: immediacy - transfers can be made in realtime; security - cash can be stolen or lost; convenience - geographic locality is irrelevant; efficiency - no more queuing to pay bills; cost - transactions are conducted via SMS; and mobility - transactions can be conducted on the street, where people meet. Banks benefit from cash retention and an enhanced set of products to offer their customers. Mobile operators benefit from increased network usage and customer loyalty, particularly relevant in a context where most of their customers are prepaid customers who change networks relatively easily. Cash-based economies suffer from the inherent inefficiencies of cash and cheques as payment instruments. There are many benefits to be gained from migrating to electronic payment instruments - mobile being an excellent example. Efficiencies associated with the introduction of electronic payment instruments can lead to cost, time and risk reductions, as well as to further economic growth. Mobile technology enables realtime transacting between bank accounts, maximising interest-earning opportunity. Mobile transacting is being used for person-to-person payments anywhere in the world, 24x7. It is used to pay for services as well as in the retail environment, to buy groceries, pay for meals, even fill up with fuel. Transaction data is encrypted to ensure security. Payments are effected immediately and only incur the additional cost of a single SMS. The demand for mobile banking services in Africa is substantial. In 2002 the number of cellphones in South Africa exceeded those of fixed line users, while Nigeria alone has as many as 30 cellphone users for every fixed line user. Africas cultural and economic diversity adds challenge to the evolution of mobile transacting. Some African countries have been stable for more than a decade and have solid technological infrastructure in place, while other countries have just emerged from war, are economically strapped and have little or no infrastructure. However, the services and applications driving the evolution are dynamic and adaptable, such as pre-paid airtime top-up and electronic voucher distribution (EVD), two prominent technologies that integrate directly with the banking system. The penetration of GSM into Africa is happening fast, with major growth potential in the intersection of electronic transactions, mobile phones and the mobile networks. Merging GSM coverage and penetration with the need for electronic transactions will not only deliver on market demand but have a positive com