Cover Story

An industry is born

Visionary CIO for 2009, Absa’s internet channel head Carl Louw, is a softly spoken, unassuming man who created an industry and looks set to change one or two others.
2 December 2009

The core feature of any Visionary CIO is that he, she or it must fit the ‘visionary’ criteria – 2009 winner Carl Louw does just that.

He is described by the judging panel as “a man with an almost uncanny ability to predict business usage of emerging technologies; a person whose track record of success spans a decade, and who has earned the confidence of his organisation to continue exploring new uses for technology.”

It’s seriously unlikely that Louw would credit himself with the creation of the local mobile banking industry, but without him, the sector would not have taken off when it did. Mobile banking is only gaining real traction now, internationally and locally. Louw saw the potential a decade ago, and fought to make his vision a reality.

“It started in 1999, when I joined Absa as a programme manager in charge of e-commerce,” he says. Prior to that, Louw worked in the IT space for the Comparex/Persetel/QData companies.

“So we did the programmes and implementations and in the latter part of that year my mind started wondering about what else is out there. I saw an article on a Swedish bank that had introduced mobile banking and it intrigued me. We had a good banking system, internet penetration wasn’t where it should have been, so I thought, let’s look at mobile – which had 15 million users then, and was growing strong. I thought if we could get closer there, we’d grow further.

“I put out feelers and went to Vodacom and MTN and asked them what it would take. I called the bank in Sweden. I realised it was doable but that there were constraints. For example, there was no security on WAP.

“So we got together and looked at an ingenious way of doing it – not using WAP or the browser, but SMS-based.

This meant we could immediately include all phones (back then only one Nokia did WAP), but it wasn’t secure. So we talked to the chip-makers about how to put an application on a SIM card so it would be secure.”

The first application, with triple-DES encryption, on a SIM card, came out in January 2000.

“The 16k card couldn’t handle the data though, so I convinced Vodacom to swap its entire base onto 32k SIM cards, which it did, because it realised it needed to get into the data space.” Louw, needless to say, still has his – the third 32k card in the country – totally unbranded.

Once the SIM cards where issued, he says, the project really gained momentum. Louw got buy-in from executive management (in the form of current deputy CEO Louis von Zuener) and mobile banking was implemented in Absa, with Vodacom, at a cost of R1 million.

“We used the same technology with MTN, and it became the de facto. Standard Bank implemented it. We managed to achieve mass market availability. It didn’t penetrate immediately but we got it, and it’s still getting there. It was the start of an industry, I think it was born there,” he adds.

Louw still has a framed cover story from ComputerWeek from August that year, when the mobile banking service launched. The headline reads: “Mobile banking to overtake online by 2003”.

“I was out by a few years,” Louw laughs. “Today we have 1.1 million online banking users and 1.5 million mobile banking users.”

Louw’s timing may have been out but his vision wasn’t. According to local research house, BMI-Tech- Knowledge: “There are schools of thought that the adoption curve of mobile banking in the next ten years will be similar to the 1995 to 2006 adoption of online banking.”

“We have 90 000 new mobile banking customers per month, where online is 20 000 to 22 000,” Louw says.

Looking forward

Today, Louw heads up the internet banking channel at Absa, and his baby, the mobile channel (now including prepaid airtime top-up plus the messaging component, and mobile statement delivery) is managed by Adrian Vermoten. He managed both at one stage, before they were split.

“From the business’ perspective, the online channel is bigger – generating R800 000. Mobile banking is not there yet.”

Louw has taken Absa’s online activity into the social media space, with a Facebook page, which, he says, is an incremental strategy that it’s slowly ramping up. The next big interaction for the online channel will be a big push in the online sales space. “Over the last two years, we’ve had a big strategic drive around online sales. It’s the next big interactive channel, not just from a service perspective. Online is becoming a major acquisitive entity too.”

Louw is looking three steps ahead, as usual, and online is where it’s at, although he’s not willing to part with all of his secrets.

“My view is that online banking will go through a radical change. Transactions and information won’t be the major drawcard in future. We need to move up the value chain to compete. There are going to be a lot of aggregators, so the website will be the starting point for banking services. It’s going to be big in financial management. Everything will happen there.

“You’ll have the ability to look at your statements and be able to categorise spend – so that transaction at Woolworths is food, the one at Edgars is clothes, etc – then overlay that with your budget so you can manage overspend and underspend. This will be the drawcard, not transactions.

“The site will be presented the way social networking sites are today, less corporate, and using technologies like Ajax, fly in/fly out, etc, that appeal to the younger crowd. You’ll see services like social lending being pulled in to mainstream banking (as is currently happening in the US).

“I think we’ll see a large uptake in people starting their relationship with a bank online. We still see previously disadvantaged and rural people using branches but we see the numbers in the online space are on the up. Online is an immediate-gratification thing – the bank that doesn’t get that will lose out,” he states.

Time will tell if Louw is right, or not, but given his track record, we won’t be surprised to see him proved totally correct, and once again setting a standard for the local banking industry.