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Picture: BLOOMBERG/WALDO SWIEGERS
Picture: BLOOMBERG/WALDO SWIEGERS

Vodacom is wading further into banking territory as it announced on Thursday the launch of a new unsecured loans service, VodaLend Compare, to compete with traditional banks, which dominate the market.

Like rival MTN, Vodacom has been working to grow earnings from financial services as a way to plug holes from falling voice revenues and ever squeezed data margins owing to a public outcry about the high cost of mobile internet access in SA. Since its flagship mobile money service — M-Pesa — failed locally in 2016, the company has been working to find other ways to make money from this sector, expanding into areas like insurance and lending. 

Lending has been a growing part of Vodacom’s offerings, with the success of small R20, R10 and R5 transactions for airtime advances. In the half year to September 2021, Vodacom advanced R6.5bn in airtime, an increase of 14.3% over the previous comparable period. Airtime Advanced represented 45.5% of total prepaid recharges in the period. 

Now SA’s biggest mobile operator will offer unsecured loans ranging from R500 to R350,000. 

VodaLend Compare allows customers to compare personal loan quotes in simple steps, “enabling them to apply for the best option that suits their lifestyle needs and budget”.

Mariam Cassim, CEO of Vodacom Financial Services, says the service is designed “to respond to consumers who may need a financial boost quickly for personal use, such as emergency medical expenses, unplanned relocation costs or home renovations, without a tedious application process”.

The platform will give customers up to nine personal loan offers from different providers — like Nedbank, African Bank, Finchoice and Boodle — with one application. This service follows on from Vodacom’s other offering, which advances funds to small- to medium-sized businesses.

Building a super app

The new service appears to be the next big step in an attempt to up the attractiveness of its VodaPay super app, launched late in 2021. 

Vodacom is diversifying its business away from basic telecommunications, where margins are under pressure from stiffer competition and greater regulatory scrutiny from the Competition Commission. The group is targeting new services accounting for 25%-30% of service revenue by 2024.

Vodacom’s financial services strategy has been driven by M-Pesa outside SA, focusing on mobile payments and lending. Its VodaPay app is billed as a one-stop platform for individuals to buy anything from electricity to insurance.

These super apps and platforms are the biggest indicator of the collision course between mobile operators and banks, which are using the same strategy to offer clients a range of services in one place. 

FNB — which has developed a reputation over the years as a digitally focused bank — has effectively positioned its online banking platform as a super app. It recently launched an e-commerce service through the platform, allowing people to buy and sell products and services, all with the convenience of making payments through its system.

Nedbank has a similar offering, akin to WeChat in China, while Standard Bank recently launched OneHub, a one-stop shop for corporate customers to access digital tools and services. 

The stakes are high for the success of these platforms on both sides of the spectrum. Mobile operators have the advantage of large customer bases on their side, while banks have greater support from regulators, an important factor in the battle. 

gavazam@businesslive.co.za

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