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MTN, Standard launch cellular bank
MTN and Standard Bank have launched a mobile banking joint venture, MTN Banking, giving Standard Bank access to MTN's subscriber base and offering MTN an opportunity to grow its subscriber base and revenue.
MTN Banking's first product is the MobileMoney transactional account, essentially a SIM card-based bank account that allows for such transactions as person-to-person cash transfers, account payments and SMS notification – all via a cellphone.
MTN commercial director Irene Charnley says the venture gives Standard Bank access to more than 10 million MTN subscribers in SA, through 15 000 distribution points.
Plans are underway to expand into the rest of Africa.
She says the product gives subscribers the ability to open an account within minutes and allows them to do banking 24 hours a day.
The benefits for MTN, she adds, include an increase in data traffic, a new revenue stream, and an opportunity to grow the subscriber base. The deal also differentiates MTN further from its competitors.
Peter Wharton-Hood, MD of retail banking at Standard Bank, says the popularity of electronic banking channels is increasing. “For many years there has been a fascination with what will be the link between cellular telecommunications and banking,” he adds.
“We want to steer customers away from the branches, and this product is priced to encourage that,” he says.
The account carries no monthly fees or a minimum balance, although a maximum balance of R25 000 is imposed and transactions limited to R5 000 a month to gain Financial Intelligence Centre Act (FICA) compliance.
A balance enquiry costs R1 (the SMS itself is not charged), a person-to-person payment costs R3 and a cash withdrawal (using a supplied ATM card) costs R5. Wharton-Hood says this is far cheaper than branch charges.
The bank account number is the cellphone number, with the addition of a control digit.
Wharton-Hood adds that the product is secure, with more layers of security than on the existing electronic infrastructure. In addition to standard security such as PIN, other security layers include voice verification.
When accessing the account on the Internet, all logins are through the cellphone, not through the Internet browser, eliminating the possibility of keystroke logging and other security threats.
Wharton-Hood says MTN Banking functionality will be on every SIM card issued by MTN from now on.
“It is both a defensive and offensive strategy in one,” he says. “People have often asked what we would do if a cellular company got a banking licence. We now know. We set up a 50/50 joint venture with them.”
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