Wizz Kids And Cellphone Banking
Tuesday, September 20, 2005
It would seem that MTN Banking was not the first to market with a pure cellphone banking product. Wizzit, a small company that has purposely stayed under the radar screen for fear of being trampled on by the bigger banks, launched a cellphone-banking product in November last year.
Without any above-the-line advertising, it has sent 740 previously unemployed “Wizz Kids” into the townships and rural communities to assist people in opening a Wizzit account on their cellphones — and the number of Wizz Kids is growing.
Unlike MTN Banking, Wizzit works across all cellphone networks. It also works with any model cellphone and you do not have to have a 32Kb SIM card, all of which are restrictions on the MTN Banking product. You do, however, have to have a copy of your identity book, something MTN seems to be circumventing. The need for an identity book is currently being discussed with the National Treasury.
A recent survey by C-Gap (Consultative Group to Assist the Poor), Mastercard and Finmark Trust showed that Wizzit, which comes with a funky Maestro debit card, is fast developing a cult status in the townships. Although launched in November, it was only fully operational in April, following Reserve Bank approval on its test product, and has opened around 10 000 accounts and processed nearly 100 000 transactions. “We are ahead of target and expect to break even within the next year,” says Brian Richardson, founding director of Wizzit.
Richardson and his partner Charles Rowlinson, previously of the listed Educor and Logical Options, are the brains and funding behind Wizzit, which now has a 26% black economic empowerment stake. “The idea came over a discussion Charles had with Cyril Ramaphosa; they were both bemoaning the fact that it was so difficult to open an account for their sons who were off to university. Cyril commented that if it was difficult for them, imagine how the masses who did not have access were struggling.”
It took time to find a bank that would work with Wizzit to give it the back-end system and sponsorship into the Payments Association of South Africa (Pasa) to interlink with other banks. “None of the big four were interested because we did not form part of their strategy.” Wizzit finally forged a relationship with the South African Bank of Athens, and has an arrangement with Absa and the Post Office to accept deposits.
Wizzit only recruits unemployed people. Even Pieter Kruger, who created the IT system, was out of work and struggling to find a job as a white, male Afrikaner. “He was emigrating to the United Kingdom when we managed to convince him to stay. Today he has seven black IT professionals working for him.” Richardson believes that, with such high levels of unemployment, it is not right to take people from other companies, but rather to offer opportunities to those struggling to find employment.
The pricing of the product is similar to MTN Banking, although the Wizzit to non-Wizzit account charge is higher. It charges R4 plus 99c per R100 for an ATM withdrawal. But, Richardson says, what many people don’t realise is that anybody can withdraw money from Pick ’n Pay and Checkers as a cash-back payment, and they only pay R1,99 for the withdrawal, which is a far cheaper option.
Wizzit is aiming to sign on more merchants as customers so that people can pay using their cellphones. Currently, it has several restaurants as clients, including Wandi’s and The Rock in Soweto, as well as proprietors of small businesses.
The emergence of virtual banking through Wizzit, MTN Banking and innovative banking by Capitec, using chip technology, shows that there are plenty of players ready to take up the challenge of the unbanked and give the big banks a real run for their money.
Jeremy Leach of FinMark Trust says that South African banking is facing interesting times. “There is recognition that there is a big market in the unbanked, and this is encouraging competition. It is exciting to see more effective and appropriate products coming to market with simple applications that are aimed at the under-served areas.”
Leach says that in many cases these banks are giving good interest rates, resulting in positive returns for account holders. He adds, however, that the big banks’ approach so far has been very cautious, and they are still trapped in the big-bank mentality. “Even with Mzansi, their low-cost product, they penalise people who use the card over a certain limit and, despite the introduction of the money-transfer product, the costs of this are still far too high. The banks are struggling to adapt to the high-volume, low-margin model, which the new players have recognised and so are already making in-roads into this market.”