Innovation which is normally associated with technology companies has become the buzzword for SA's biggest four retail banks whose desire to transform retail banking using technology has become an obsession for some.
The banks recognise that rapidly changing technology is upending the traditional brick and mortar branch model.
This is particularly true as more younger customers become banked and are less likely to use branches for their banking.
Furthermore‚ new card and card-less payment methods are being developed which some bankers say have begun the end of the cheque book. Even cash as a mode of payment could eventually become obsolete‚ they say.
Innovation by the banks is being driven mostly by the rapid convergence taking place particularly between financial services and mobile technology which is converting the mobile cellular or smartphone into a virtual banking hall.
Michael Jordaan‚ CEO of First National Bank‚ says this convergence‚ coupled with the introduction of the latest mobile handsets‚ has enabled banks to launch an array of mobile payment solutions.
The head of Deloitte Digital‚ Andre Hugo agrees‚ saying financial ecosystems embedded in online and mobile social media environments have leapfrogged the traditional banking business models.
The most visible effect of the convergence between mobile and banking technology outside SA is the success of the M-Pesa money transfer service in Kenya.
The service - which is being replicated with limited success so far in SA by Nedbank - has grown to become the top three contributors to the east African country's annual gross domestic product‚ according to estimates.
Mobile money transfers
In SA‚ mobile money transfer and payments are also increasing‚ according to research which shows that by the end of 2012‚ 14 million mobile users in SA will have made a total of R7bn in mobile payments.
This compares with over 120 million of Africa's 760 million mobile phone users who will have made mobile payments exceeding R60bn by the end of this year.
Brett StClair‚ head of new products at Google's sub-Saharan Africa office says 65% of South African smart phone users access the internet at least once a day.
"On average they have 17 (applications) installed on their smartphones compared with the average of over 30 installed in mature markets‚" he says.
"Some of the opportunities open to banks include that smart phones provide a secure‚ intelligent platform - essentially a mini supercomputer that fits in your pocket - that caters to the fact that 85% of South Africans have researched a product or service on their phone‚" he says.
To their credit‚ South African banks realise customers are adopting technology faster than they can innovate.
That is why banks have and continue to develop products that allow customers to‚ for example‚ use mobile phones and smartphones to perform such tasks as money transfer‚ pay bills‚ purchase airtime and electricity.
Ingrid Johnson‚ the managing executive in charge of retail and business banking says Nedbank has embraced innovation as a tool to empower customers than solely as a marketing ploy to lure customers.
Johnson says innovation should not be a "nice to have" theme but must benefit customers.
Standard Bank and Absa are piloting near field communication payment methods where a customer will simply tap their mobile phone against a reader when making small payments.
Among other innovations‚ Standard has also launched a banking application and has partnered with global digital security company Gemalto to produce a contactless payment card for users to pay for transit fares and other goods and services.
It says over 100‚000 cards have been produced for the eThekwini Municipality which aims to improve ticketless payments for its public transport system in Durban.
FNB has introduced a swathe of innovations and has a three-year pipeline of more surprises‚ says Jordaan.
Jordaan also says innovation should be helpful to the customer. He says while competitors can easily copy products‚ they will struggle to establish or copy an innovative culture.
Take risks, make mistakes
"Ideas are cheap‚ execution is hard‚ especially when employees need to navigate corporate bureaucracy to get their ideas implemented‚" says Jordaan.
"Innovation is not possible without taking risks and making mistakes. Hundreds of small innovations can be much more powerful than one great innovation‚" he says.
Absa's head of retail markets‚ Arrie Rautenbach says the group will partner with UK-based parent Barclays to "fast-track" innovation in SA and in Africa.
Barclays has already launched a mobile money transfer service in Kenya called Pingit which it wants extended to other markets where Barclays and Absa operate in Africa.
Absa - whose banking application will be introduced early in 2013 - also last week launched what it said is the world's first card-based mobile payment device for merchants and traders called The Payment Pebble. Willie van Zyl‚ Absa's head of acquiring and commercial cards says more innovations are planned.
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