First National Bank (FNB) has announced the launch of eWallet eXtra, a mobile bank account that allows unbanked and underbanked South Africans to use a feature-phone or smartphone to open a bank account without submitting paperwork at a branch. The solution will be available by June 2018.

This comes at a time where a number of rival banks such as Bank Zero, Discovery and Tyme wait in the wings to make their debut in the industry.

eWallet eXtra is by no means a new concept. FNB already has an eWallet that enables customers to send and receive money, while rivals Absa and Nedbank have CashSend and Send-iMali respectively, where you can transfer money instantly using mobile or internet banking. With Absa’s offering, customers can collect money from any Absa ATM with no need for a bank account or bank card. Similarly, Nedbank’s Send-iMali allows you to send cash anytime, anywhere without using bank account details. Meanwhile FNB’s eXtra product is not set to replace eWallet – it is in fact a separate product offering.

So what’s new?

eWallet eXtra will have no monthly fees, which is set to put the cat among the pigeons, since Old Mutual’s Money Account still charges R4.50 a month and Capitec’s Global One Account charges R5.80 a month. What’s more, consumers are not required to submit any paperwork to open this account, requiring only their name, surname and ID number on a mobile device.

“This is a simple, accessible and cost-effective solution. If you are above the age of 16 and own a cellphone, you’ll be able to get a mobile bank account with a unique account number in less than three minutes, and you don’t need a bank card to transact,” says Gugu Zikhali, FNB head of transaction products: mass market.

“eWallet eXtra will enable users to send or receive deposits from individuals and other banks, store funds for an unlimited period, pay accounts and also buy prepaid products like airtime, data and electricity. Users can also send money to other recipients and withdraw at any FNB ATM or at tills across participating SPAR stores, which also allow for over-the-counter purchases,” adds Zikhali.

If you want a fully functioning account though, with no spending limits, this product is definitely not for you. It is a basic account, with no facility for debit orders, and spending limits of R3 000 per day and R24 000 per month.

Like other online offerings, eWallet eXtra users will be able to view their bank account balance and transaction history. Those who use an FNB Connect SIM will be able to access eWallet eXtra for free as they do not need airtime. Safety has also been prioritised: the first layer of security on eWallet eXtra allows users to generate a PIN code to access their account.

Why target the unbanked?

Banks are always looking at new consumers to target and FNB estimates that there are more than 11 million people in South Africa who don’t have bank accounts. Globally, it’s predicted that there are around two billion people without bank accounts.

FNB wants to capture this market before new online providers ‒ and retailers keen to get into the banking sector ‒ snatch these potential customers.

There have, however, been some challenges. According to research from Boston Consulting, many South Africans distrust the formal banking sector, and are put off by high prices and lack of relevant services. Financial institutions are starting to tackle this by offering cheaper products that bypass the need for call centres and over-the-counter interaction.

FNB believes the success of eWallet eXtra will be due to its ability to address the gaps that the bank has identified in its analysis of entry-level bank accounts and its eWallet remittance service. Pieter Woodhatch, CEO of FNB Easy, points out that traditional bank accounts which carry monthly fees and accept debit orders, do not meet the unique needs of irregular income earners such as seasonal workers.

“This is why we have integrated some eWallet functionality into the eWallet eXtra mobile bank account. After an in-depth assessment of eWallet user patterns, we realised that in excess of one million users have been effectively using it as a bank account despite the fact that the solution was designed as a remittance service,” explains Woodhatch.

Woodhatch adds that digital adoption is the main solution to addressing the gaps in financial inclusion. “66% of regular eWallet users leverage digital platforms, and mobile devices remain critical in extending banking services to unbanked and underbanked populations. Digital gives customers full access to their money and puts them in control,” he concludes.

This article first appeared in City Press.