Online banking clicks into gear

16 April 2004

Online banking in South Africa is growing rapidly – despite recent online security scares. That’s according to research conducted by Internet analysts World Wide Worx (WWW).

WWW says the number of online bank accounts in South Africa grew by 28% in 2003, reaching 1.04-million accounts. It’s expected to grow by more than 30% during 2004.

“Ordinary South Africans kept a cool head while the media created a frenzy around a handful of isolated security incidents”, says WWW managing director Arthur Goldstuck. “The public failed to allow the hype to dampen its enthusiasm for online banking.”

The survey showed that of the big four banks in South Africa, which include First National Bank, Standard Bank and Nedbank, Absa continues to hold the largest number of online banking accounts.

However, Standard Bank is expected to catch up significantly during 2004. Both banks have aggressive marketing campaigns around Internet connectivity, which appears to have been a key to their dominance of the market niche.

The survey also shows that mobile banking has not yet taken off in South Africa, but that most banks expect strong take-up during 2004. eBucks, a service offered by FirstRand, leads the way, having already pioneered the use of SMS to verify transactions.

The survey evaluated the usability, transactional functionality and content strategy of online banking sites in South Africa, using the “webagility” system developed by World Wide Worx for benchmarking websites against best practice.

IcanOnline and Absa came out as the best online banking sites in terms of general usability, while eBucks scored highest on transactional functionality, and Absa came out tops for the content strategy of their website.

Absa scored highest in the combined benchmark, which provides an indication of website effectiveness and competitive edge.

“While there are clear leaders, it is gratifying to see the extent to which the overall standard of all the online banking sites has improved”, says Goldstuck. “It is clear that banks have come to accept the strategic importance of their online presence.”

ICT innovations by SA banks
The South African Technology Vanguard (Savant), a recently launched partnership between the government and key industry players, argues that while South Africa is firmly part of the technology mainstream, applying the world’s best technology and keeping pace with progress in the industry, the country simultaneously adapts and applies these technologies to the local market.

Savant supports this argument by citing a number of ICT innovations in the South African banking sector:

Standard Bank was the first bank in the world to enable the online transfer of funds from mortgage bonds, using clients’ homes as collateral. The bank was also one of the first two in the world to link mainframe computers in disparate sites, allowing customers nationwide access to their cheque accounts.

United Building Society (now Absa) was the first institution in the world to use IMS Fastpath, simplifying banking transactions and processing a record number of transactions per second. Following this, Absa Bank was among the first three institutions in the world to run an IBM Sysplex using IMS Fastpath.

Volkskas was the first bank in the world to implement remote network management to stabilise its network and obtain predictable response times, and Allied Building Society was one of the first institutions in the world to use FBSS for teller transactions in an IMS environment. Both these banks are now part of Absa.

Internet access in SA
The last three years has seen a dramatic slowdown in Internet access growth in South Africa. Growth in access in 2002 was around 7%, the slowest since the Internet became available to the South African public in 1993, and the first time it dropped below 20%.

In 2003, growth was set to be only 6%, with 3.28 million South Africans expected to have access to the Internet by the end of 2003

But analysts say this will change with the appointment of a second telecommunications operator, which is expected to challenge Telkom’s monopoly. The rollout of high-speed or broadband wireless access by Sentech, and a healthy rand-dollar exchange rate, are also expected to significantly contribute to increased access in the country. reporter