In October 2009, First National Bank (FNB) launched the eWallet in South Africa, a mobile money solution to bridge the gap between the banked and the unbanked. Almost four years later, FNB eWallet is the largest mobile money service in South Africa [1] with 2 million recipients and has processed transactions for over R5 billion (USD 499 million). FNB has also rolled out the eWallet in Botswana, Lesotho, Namibia, Swaziland and Zambia.

Today, we publish an exclusive interview with Yolande van Wyk, the CEO of FNB eWallet Solutions where she shares with our readers the key factors that have influenced the success of the eWallet.

MMU: What was the rationale for FNB to launch the eWallet?

Yolande van Wyk: We wanted to develop a product that would allow the previously marginalized members of South African society to feel included and empowered. eWallet is a bridge between the banked and the unbanked. There are real systemic reasons why there are people are unbanked in South Africa: most predominantly, poverty is a true reality and people don’t have consistent access to income. Within this context, 33% of South Africans are dependent on other to send them money.  With the eWallet, we are addressing the need of dependents to receive money from income earners, quickly and easily. In addition, using mobile as a channel allows us to reach many marginalized people who have a mobile phone but do not have a bank account. We have also developed a network that is not dependent on our bank branches.  Recipients can withdraw their cash at any of our ATMs, as well as a network of non-cash dispensing ATMs (Slimlines) that we are rolling out at the moment.

MMU: Can you tell us more about your distribution strategy? What has been your approach to developing these access points, in particular in rural areas?

YvW:  Our strategy has been to rely on FNB ATMs and to partner with retailers. FNB has a relatively large network of over 4,000 ATMS which gives us a good footprint especially in urban areas. Registered eWallet users can go to any FNB ATM Advance and deposit money into their mobile wallet. We also have a network of over 1000 Mini ATMs (currently being replaced with a new Slimline which allows for even more functionality in remote areas). These ATMs are small touch-screen terminals installed in a shop allowing anyone to withdraw cash and allow FNB customers to check their balance. We launched the solution in 2003 to extend our footprint in remote areas. In addition, we have partnered with Spar to allow eWallet users to cash-in and cash-outs at the retailer’s outlets. This is a new solution we are piloting in a rural district and we are hoping to roll out the solution across the country if the results are positive.

MMU: This approach to distribution is quite unique. Most mobile money providers use networks of mobile money agents to offer cash-in and cash-out services. Why did FNB decide to depart from this traditional approach?

YvW: First, we wanted to leverage our existing assets. Using FNB ATMs and mini-ATMs was a natural choice for use. In addition, in South Africa unlike in many other Sub-Saharan African markets, there are large commercial players including retailers who have a large footprint in rural areas. We wanted to try to leverage their presence to offer the eWallet.

MMU: We have seen a number of mobile money providers trying to leverage large retailers for cash-in and cash-out, especially in South East Asia. What lessons have you learned in South Africa that you would like to share with them?

Cross-industry partnerships are difficult. It cannot be treated purely a typical arms-length commercial relationship. The partnership has to make sense for both parties. We also needed to understand the business drivers and challenges of our partners. All companies have operational models that work, are trusted, and may not be messed with. When partnering, both parties have to operate within these limitations.

Cash and store liquidity is probably one the most difficult things to work with.  In some areas, stores are not willing to take deposits due to the increased security risks.  In other areas stores may run out of cash, which is a real problem if it is the only cash withdrawal point in a village.

Our biggest lesson is to not try and re-invent the wheel.  Use what works, and also, don’t try and copy business models that are not relevant to South Africa.

MMU: With over 2 million recipients, FNB is a leading mobile money service in South Africa. What is the typical use case for the eWallet?

YvW: Most of the remittance transactions are initiated by our banked customers who send money to people for a variety of reasons. They send money to family in outlying areas, use it as a convenient payment mechanism or use it to get cash when they’ve forgotten their wallets. This is a good indication that the eWallet is effectively bridging the gap between the banked and the unbanked, as well as offering a convenient service to our FNB banked customers.  Today, our customer active rate is over 60%.  That is registered users who have used the service within the last 6 months.

MMU: This is a great example of how mobile money can advance financial inclusion by increasing access to financial services to underserved people. What have been the key drivers of adoption of the eWallet?

Convenience – FNB customers can send money instantly to anyone with a Cellphone via eWallet, using FNB’s convenient channels such as cellphone banking, online banking and FNB Banking App. The eWallet user doesn’t need to do anything but dial a simple USSD code to access funds in the eWallet. FNB ATMs enable eWallet users to access funds anytime.

Basically the key to our success was the ease of sending money from an FNB bank account to an eWallet, the fact that the recipient did not need to pre-register for the service, and the high volume of FNB ATMs in the market.

MMU: FNB has already rolled out the eWallet across Botswana, Lesotho, Namibia, Swaziland and Zambia. What is next for you?

We recently launched a cross-border money transfer solution between South Africa and Zimbabwe. This solution is not linked to the eWallet, but in the future, we would also like to launch international remittances over the eWallet.  This is dependent on regulatory requirements.