Just How Transformational Is M-Banking?

This paper discusses how mobile banking (m-banking) has changed access to basic banking accounts in South Africa. It analyzes data on financial service use and attitudes, using the access frontier approach. The paper updates an earlier analysis, which calculated the access frontier for transaction banking in South Africa using 2004 data. The paper applies the same criteria developed in 2004 using 2006 data. It also analyzes information on m-banking offerings and attitudes to m-banking to decide whether its introduction has structurally shifted the access frontier. Findings include:

• Main zones show consistency in rank-order of peoples use of m-banking and access to banks;
• Main zones also show consistency in the size of the supra-market group (SMG) that is beyond the foreseeable reach of current and foreseeable solutions;
• Account features are similar to existing bank accounts, and may cost more;
• There is ignorance about mobile banking even among presently banked customers, and considerable mistrust of banking using cellphones;
• One third of the unbanked people in the SMG have cellphones, suggesting that the future access frontier may shift outwards to include these people in time.