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Case Study


Standard Bank Shows How Mobile Devices Can Help Reduce Poverty in Africa

by Dave Hannon | insiderPROFILES

October 1, 2012

The inability to access banking services is one of many contributing factors to poverty in Africa. For people living in rural areas far from a physical bank branch, it can be difficult to apply for credit cards, manage savings, or pay bills. By offering a way for people to easily open bank accounts and access banking services with their mobile phones, Standard Bank may just be helping reduce poverty on the continent.

The biggest bank in Africa has a plan to significantly reduce poverty on the continent. It’s a strategy so simple and logical, it just might work — and it all hinges on SAP and Sybase technology.

The inability to access banking services is one of many contributing factors to poverty in Africa. For people living in rural areas far from a physical bank branch, or for those who don’t have an address or proof of residence — which is required to open a bank account — it can be difficult to gain employment, apply for credit cards, manage savings, buy a home, or pay bills.

But what if people didn’t need proof of residence to open a bank account? What if they didn’t need access to a physical bank branch, or even a computer, to open an account? What if they could open an account easily, affordably, and virtually anywhere using a mobile device, and then continuously access their account on a mobile phone?

South Africa-based Standard Bank is convinced that by answering these questions, the company can increase economic empowerment and reduce poverty across Africa, all while improving their own profitability. And believe it or not, the plan is already working.

A Long Time Coming

Standard Bank opened in South Africa 150 years ago and, today, operates in 18 African countries. The bank first implemented SAP ERP in 2001 to streamline its internal operations including finance, human resources, and procurement. By 2005, the bank began rolling out SAP solutions for core banking services such as loan origination and savings. While the new technology helped Standard Bank expand its reach within some segments of the market, the company’s biggest challenge was always delivering banking services to a wider population in rural areas of Africa.

“In South Africa alone, we have eight to ten million people that we didn’t know how to bring banking services to because they don’t have access to physical banks and they don’t use computers,” says Wally Fisher, Executive for Business Readiness and Implementation at Standard Bank. “The traditional model of opening a physical bank branch wasn’t cost-effective enough for us to reach that unbanked population.”

Then the mobile boom hit and, from top to bottom, the South African market quickly became sophisticated in its use of mobile technology. In many regions, mobile use leapfrogged landline phones. In fact, according to Nielsen, by mid-2011, there were 29 million mobile phone users in South Africa, versus six million computer users and five million landline phone users.1 Currently, South Africa ranks fifth in the world in terms of mobile data usage — ahead of the United States.

“The traditional model of opening a physical bank branch wasn’t cost-effective enough for us to reach that unbanked population.”

Wally Fisher, Executive for Business Readiness and Implementation, Standard Bank 

Timing Is Everything

Standard Bank saw the opportunity to finally bring banking to a much wider swath of South Africans in new regions via mobile technology and began developing a strategy to do this, leveraging SAP and Sybase technology.

“We knew from a strategic perspective that we had to move to mobile account origination,” says Fisher. “And when SAP introduced us to Sybase, we realized we could do two things at once: standardize our back-end systems on the SAP platform, and deploy mobile account origination capability using the Sybase platform. The timing worked out perfectly.”

In November 2011, the bank took the next step and deployed the SAP for Banking industry solution on Sybase Unwired Platform using SAP Afaria to enable the origination of accounts on a mobile device. “We had to build an environment that was transferrable, scalable, and secure,” Fisher says.

To bring this capability out to the field, Standard Bank is using two methods. It is recruiting local contacts to become community bankers who can open bank accounts for customers with a mobile device linked to the SAP system. The second method is setting up access points or “bank shops” across South Africa, which are local shops in rural areas that have a point-of-sale device used to set up bank accounts for customers on their mobile devices. There are more than 4,000 active access points running already, allowing customers to do their transactions, purchases, and cash in and cash out.

Today, Standard Bank originates on average between 7,000 and 8,000 new accounts a day using this strategy, with each transaction typically taking less than eight minutes. The cost to perform those originations, as well as the maintenance and service of the accounts, is much lower than originating and servicing traditional accounts at bank branches, making mobile accounts more profitable. And most importantly, the strategy provides banking services to people who did not have access to them in the past, contributing to the goal of improving the economic outlook for South Africa and later, the entire continent. 

Recipe for Success

While the project is still in its infancy, the number of new accounts being originated indicates it will bring value to both South Africa and Standard Bank in a true win-win. Its success is a shining example of what happens when a well-defined strategy meets strong execution.

Fisher says there were four main factors that helped drive the mobile project to a successful completion:

  • Setting a firm project deadline. Many of Standard Bank’s competitors were looking into mobile banking as well. Fisher says, “We knew there was a competitive edge we had to gain that would disappear over time.” Also, mobile origination allows the bank to add customers at a much lower cost than traditional models, so the bank wanted that profitability boost added to its bottom line as soon as possible.
  • Creating the right project team with the right accountability in place. “We built a multi-dimensional team of internal and external experts and told all team members that while the project would be led by Standard Bank, the subject matter experts from Sybase and the other outside firms would have as much accountability in terms of delivery as everyone else,” he says.
  • Ensuring the project was led by business goals. Despite the fact that the project involved deploying mobile technology, all of the benefits centered on business value. To reinforce that the project was not to be viewed as an IT implementation, the rollout was referred to internally as a “business release.”
  • Attaining support from the very top. The CEO’s office at Standard Bank, as well as high-level support at SAP, was important in driving all of the other aspects of the project such as timing, resources, and benefits. “The notion of both companies driving it from a very senior leadership perspective and taking it very seriously helped drive the right focus and purpose down into the project team,” Fisher says.

Change Management Drives Future Growth

Gradually, Standard Bank envisions migrating more of its existing customers at all levels off of its traditional banking platform and onto the mobile banking platform to increase the company’s own profitability. Long-term success of the mobile banking strategy depends on how well both Standard Bank and the African banking customers adapt to the new model. For these customers, the adoption of mobile banking depends primarily on two factors — trust and ease of use. Fisher says that while other mobile banking initiatives have been launched in Africa, most were launched through partnerships with telecom providers. This simply doesn’t bring the same trust factor compared to the continent’s largest bank.

At the same time, Standard Bank focused on making the user interface secure, simple, and flexible to meet the needs of the diverse mobile population in Africa. In South Africa specifically, the mobile population is “mature,” and security is a top priority. “You have to continue to work at it because people by their nature do not necessarily easily trust technology,” Fisher says. “A lot of our effort went into the education piece of both our staff and our customers to build credibility and trust.”

Internally, change has to occur at Standard Bank to bring the program to new levels. Migrating more of its customers from a traditional banking model to a mobile one will require new thinking across Standard Bank very quickly. Efforts to bring customers away from the physical banks and onto mobile banking will ramp up early next year when five million of the company’s customers are being serviced on the SAP platform.

But for now, the team at Standard Bank takes pride in the fact that they’re bringing affordable banking services to thousands of people who never had it before. “Seeing our customers after they’ve easily set up the account with smiles on their faces, knowing they can now transact and be part of an economic system and knowing it may reduce poverty, it’s a very special sight to see,” Fisher says.   

Nielsen, “Mobile Phones Dominate in South Africa” (September 30, 2011; [back

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