Wizzit: Getting Banking Right in South Africa
One of the biggest hurdles to development in Sub-Saharan Africa is lack of access to banking. We have lamented the degree to which this gaping hole stymies the Diaspora and their efforts to send money back home, and commented on the reality that banks want a piece of this money. Which in many respects gives Diasporans a certain amount of leverage that the average African worker just does not have. Wizzit seems to get it. There is a way to serve the needs of the poor, have a socially responsible business model and still make money. Wow, what a clever bunch of folks. Actually doing business and banking the old-fashioned way!
So here is the deal. Traditional banks have tremendous overhead. These days a bank means, a branch office, corporate offices, bank tellers, computers, and all the rest. All of which costs money; money banks get not by earning interest on their deposit investments, but off the fees they charge their customers. So many fees in fact, that for most unbanked people it makes no sense. If up to 25% of your deposit will get eaten up in fees, why not take your chances and just deal in cash? It is a gamble, sure, but why not take the gamble? A sure 25% loss versus the risk of your hard earned cash getting stolen out from under your mattress? I might take that bet myself if I were in their position. Banks are require all sorts of things like minimum opening deposits, minimum balances, they are flat out inconvenient and expensive. On top of this it is incredibly difficult to get an account, period. As an example Post Bank of Uganda has the following list of requirements to open a transaction account:
UGH! Anyone who has opened a bank account in the US finds this list a bit difficult to swallow. For a loan sure, some proof of ability to pay and general responsibility is expected. However, to open an account for deposits and withdrawals, this laundry list of requirements is almost laughable. Essentially all I need to open an account here in Texas is a photo ID and some money to put in the account. I give them some personal information sure, but unless I want credit, all they care about is the cash.
Ok let’s review.
Wizzit a relatively new player on the banking scene in South Africa (founded in November 2004 as a division of South African Bank of Athens) set out to change all that. Their target is South Africa’s 16 million unbanked. So Wizzitt does not have bank branches, they have a dedicated mobile sales force known as WizzKids. If you call Wizzit and tell them your Mum wants to open an account, a WizzKid heads out to her and gets it set up. There are no fees for having the account, there are no minimum balances. They set up tents in farming communities and open accounts with the local farm worker, the average time to open and account? 20 seconds. Not too shabby. In addition to the WizzKids sales force they have also partnered with Dunnes stores. Wizzit and Dunnes target the same customers. 99% Dunnes customers are unbanked, so now you can open a Wizzit account at your local Dunnes store. So With a Wizzit account, you primarily do transactions with your phone via sms; you get a Maestro branded debit card which can be used in businesses that accept debit cards. Want to withdraw money? Use and ATM or get cash back at a local debit card accepting buisness. Convenient, cheap and easy. What could be better!?
There are a few wrinkles. CNN reported that there have been complaints about the amount of time it takes for checks to clear, and if you are relying on cell phones you have to deal with the instability of the phone network. No phone service? No banking services… not so good.
From the Nextbilion.net
WIZZIT is a cellphone-based banking facility whose target market is the estimated 16 million unbanked or underbanked South Africans - about 60 percent of the country’s population. Unlike its competitors (FNB and MTN), WIZZIT does not require users to have a bank account and is compatible with early generation cell phones popular in low-income communities. The facility even works with customers who use pay-as-you-go cellphones - another distinction. In addition to being able to conduct cellphone-to-cellphone transactions, WIZZIT account holders are issued Maestro debit cards that can be used at any ATM or retailer. WIZZIT charges per-transaction fees that range from 99c (USD 0.15) to R4.99 (USD 0.78) and does not charge a monthly fee nor require a minimum balance. There are no transaction limitations - the service is purely pay-as-you-go. WIZZIT employs over 800 “Wizz Kids” - typically unemployed university graduates from low-income communities - to promote the product and help unbanked customers open accounts.
All in all a great model, that offers real banking solutions to South Africans. There is alot of lip service to mobile banking through out sub-saharan Africa. Nice to see a business model that is offering a great product, employing people and making a profit!
The World Bank on Wizzit
Coverage on CNN focus on Africa
Coverage on Business Q&A
Coverage on SABC 2
