CIO Zone

Banking on App: Why USSD won’t Replace Apps for a While & why Banks must offer Both

Brian Richardson

The complex acronym USSD does nothing to represent its simplicity. It’s the most basic of mobile phone-based service offerings – but its potential to make strides for financial inclusion is significant. Despite predictions by some financial service providers that app-powered banking would usurp USSD, it remains the most successfully integrated and widely adopted technology in emerging markets.

Financial service providers (FSPs) looking to penetrate markets in Africa with mobile banking solutions shouldn’t disregard the importance of USSD, says mobile banking expert, Brian Richardson. Richardson, co-founder of international FinTech innovator WIZZIT International, and a global thought-leader in the mobile payments space, maintains their extensive experience working with banks in emerging markets proves that USSD works every time.

Needs-first innovation

“The power of USSD doesn’t render app-based banking redundant – they’re different offerings for very different customers and market segments,” explains Richardson.

“Some customers might have one, some might have both. There are multiple variables: income level, data access and even literacy. Not every customer has a smartphone and most won’t have Wi-Fi connectivity in more rural or inaccessible areas.”

According to Richardson, USSD therefore is a critical component of financial inclusion and empowerment.

The take-out for FSPs, Richardson purports, is to avoid assumptions made on the part of new and potential customers in emerging markets. Understanding the needs and wants of the untapped market requires extensive research – which is why it’s critical to work with a FinTech innovator who offers both USSD and app-powered platforms.

“WIZZIT has always offered both USSD and app-powered banking to FSPs looking to extend their offering. It’s a classic case of ‘If it isn’t broken, don’t fix it’. USSD is smart, quick and safe which are three integral benefits FSPs should be offering customers in a mobile banking service.”

Accessibility is key

Unstructured Supplementary Service Data (commonly known as USSD) sends messages from a mobile phone to a service provider’s network. What makes USSD so popular and usable is the ability to access it from any mobile phone – not necessarily a smartphone within data range, as with app-based banking.

According to a recent article in African Business Magazine, the perceived progression of mobile banking innovation has largely been turned on its head. Take Nigeria as an example. Apps were rolled out for Blackberry, Android and iOS as the solve-all for mobile banking. But adoption was low, considering high penetration rates. Barriers to adoption included security concerns and lack of data access. Once-dismissed as pre-tech, USSD remained the most utilised form of mobile banking – and for good reason.

Mobile Network Operators (or MNOs) have most notably leveraged USSD to offer value-added services to customers. This has won them favour with new and emerging markets, as the technology offered – though perhaps not as elegant as app-powered mobile banking – is relevant and inclusionary.

“It’s equally as important for FSPs to develop app-powered mobile banking services. There are a number of notable benefits for consumers: the use of biotechnology for safety, for example. And the range of services that can be offered through app-based mobile banking – which goes so far as to replace online banking on a desktop – is extensive. It’s not a case of one or the other. FSPs who are agile enough to offer both will reap the rewards and can do their part to boost financial inclusion in Africa.”