When the outbreak of Covid-19 and subsequent lockdown forced South Africans to stay indoors, there was a sudden but expected migration towards online shopping, writes Carol Nkosi, Senior Provincial Manager, Old Mutual Mass Foundation Cluster.
A report by Nielsen shows that 29% of online shoppers in South Africa said they had increased their online shopping since the outbreak of Covid-19.
However, this digital convenience was generally not enjoyed by the large proportion of the South African population that has limited or no access to the internet. The absence of internet access curtails not only their ability to shop online, but also their ability to conduct banking transactions digitally.
In 2020, South Africa’s internet penetration rate is expected to reach just over 56% of the population and will peak to 60% by 2023 – according to global statistics online portal, statista.com. The anticipated increase in access is positive, but cost and lack of broadband infrastructure will remain serious barriers to entry into everyday digital banking. In fact, the United Nations has indicated that its aim to have 90% of the global population connected to the internet may be delayed until 2050 or beyond.
The good news is that innovation in the financial services sector is rapidly opening up new transactional opportunities.
Transactional banking is, in most cases, the threshold to broader banking services for most consumers and this should be the point at which impact is made. Old Mutual has demonstrated through its Money Account offering that it’s possible to provide innovative banking platforms that are fully digital and cost effective. While the Money Account is available on the zero-rated Old Mutual App, it also offers users the option of transacting on a mobile device by using USSD – a functionality on any mobile phone that is operable through a dial string and does not require internet connection but allows the account holder access to the full banking ecosystem.
Convenience will continue to be driven by innovative digital banking platforms that are easily accessible and affordable. It is estimated that there are currently 22 million smartphones in the country. This bodes well for the digital capabilities embedded in digital mobile accounts such as mobile banking apps and cellphone banking.
Both platforms offer seamless access to, among others, digital payments, pre-paid purchases (airtime, data and electricity), inter account transfers and payments to beneficiaries.
While the vast majority of South Africans do have bank accounts, the reliance on cash still remains strong, largely because of the limited access to digital banking platforms and a lack of financial knowledge and understanding of the benefits of digital banking.
Inspiring trust will be a particularly important factor in encouraging the digitally marginalised into realising the benefits of digital banking.
Also needed to close the financial access gap in South Africa will be ongoing financial education, as well as creating more tailored, integrated financial solutions. To achieve this, trends in the digital payment space need to be carefully tracked and translated into customer centric solutions.
There is therefore no doubt the financial services industry has a crucial role to play in helping consumers more effectively and efficiently manage their banking requirements through digital applications.
The greater the progress we make with creating more seamless, efficient, integrated solutions that appeal to a wider segment of the population, the more inclusive and dynamic our economy will become