Business Management

South Africa: Why is Closing the Self-Service Gap so Difficult?

New research from Merchants shows that only 11% of South Africans prefer self-service channels, placing is well behind the rest if the world. Kathryn Cave looks at why this might be the case.

Cash machines are apparently so popular in South Africa, that a couple of years ago, in order to protect them from thieves, new ‘pepper spray’ security measures were introduced.  These entailed using cameras to detect anyone tampering with the slots and shooting stun spray to halt perpetrators, thus allowing police arrive to on the scene and halt the villains.  Yet new research shows that ATMs are actually only preferred by 5% of South Africans surveyed in a recent Merchants’ report, compared to 26% who favour the branch/store.

This does stands at odds to the “love affair with self-service that dates back to the introduction of automatic teller machines by banks in the 1980s” described by John Ziniades, CEO of Self-Service consulting and integration specialist, Consology. And there is always an element of uncertainty with any corporate stats or quotes due to the agenda of the organisation perpetuating them. However, what really leaps out about this research is that despite the South African economy making up 24% of Africa’s entire GDP and being, in ways, a world apart from the rest of the continent, there are core parallels with other African markets.

Evidence suggests that Africans vastly prefer face-to-face interaction to self-service channels. For example, Neilsen research based on consumer spending showed that in consumer marketing, “while print and electronic media work well to create awareness in these countries, word-of-mouth endorsements can be true game changers when it comes to purchase decisions.” Maybe the same trend can be observed here in a South African lack of interest in self-service?

This report stresses that although self-service is growing amongst higher income groups, and use of call centres (where you actually speak to someone) is high at 35%, true self service remains low. Of those surveyed, only 4% favour call centre self-service (who can blame them), but only 1% would rather use the web self-service (which is perhaps more odd).

Also, mobile banking is much more popular in countries such as Kenya, although mobile penetration rates are higher in South Africa. The editorial within the report states that, “customers need incentives to adopt new self-service channels,” and believes that the reason these are lacking in South Africa but exist in other markets: “In Kenya, where conveniently located bank branches are not an option, mobile money has enjoyed a great success as customers see the benefit in adopting mobile banking channels.”

Kevin Bassett commented on an article on Bizcommunity: “I think that mobile banking is battling in SA because the transaction charges are rather high and therefore only those who have no other way of moving money use the system.”

Tracy Burrows, on the other hand, in her commentary for LivDigital highlighted the inefficiencies of the system: “Internet banking, of course, is the best thing since sliced bread. Everything else is there in theory, but when you try to use it, seems to have been designed specifically to keep customers from bothering companies with their pesky queries.”

The report itself is clear that the lack of self-service “limits the ability of service providers to build customer loyalty”. It suggests that for South Africa to improve it will first need to increase supply by re-inventing and incentivising channel usage.  Secondly it will need to improve demand with better access to technology, ensuring a greater understanding of confidence in self-service channels.

Tracy Burrows is adamant though that IT itself, is the main stumbling block: “South African aren’t big on using self-service channels (?). Perhaps it’s more a case of – we’d like to, but they don’t work.” She goes on to lambast various channels from online travel accommodation bookings – “When it dawns on you that it’s impossible for there to be no seats available on any flight this year, you give up and call the call centre” – through to online tracking – “In my experience, insurance claim tracking systems have always been down when I needed to use them…”

It is when she moves onto automated contact centres that I begin to suspect that Burrows may have a slightly rosy view of how efficient these services are in the rest of the world. However, whatever the underlying reality, the glaring truth about South Africa when it comes to online customer services of any kind is the woefully inadequate broadband coverage. In 2009 a carrier pigeon was faster than the internet at conveying data from one side of South Africa to another, and despite the addition of undersea fibre optic cables, things have not improved as much as they should have done.

In its annual Global Information Technology Report 2013, the World Economic Forum showed that South Africa appeared 70th on a list of 144 countries in terms of broadband access, and warned that the country was at risk of damaging its economic growth if it failed to tend to the current broadband issues. While Catherine Middleton, professor in the Ted Rogers School of Management at Ryerson University in Toronto, said recently that South Africa should be aiming higher than it is with its 2020 universal broadband access plans and may even need to consider new business models.

Whether poor broadband provision, inadequate local services, or a general Pan-African preference towards face-to-face interactions is responsible; a 1% preference towards online customer service does seem astonishingly low. As businesses in the West begin to reap the benefits of full social integration both from a customer experience and proactive marketing perspective, statistics like this do reveal just how far large-scale economies like South Africa could be lagging behind.

Perhaps to facilitate progress, organisations need to go far beyond ‘pepper’ protected cash machines… and help individuals see just how much easier online customer service can be. And at the very least, it should be miles better than a call centre!


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