Mobile phone giant MTN, which recently re-launched a mobile money service with Ubank, is unfazed by increasing competition in the banking sector and hopes to replicate the success enjoyed by the product in other parts of the continent where it operates.

The company - which operates in 22 markets in Africa and the Middle East - cancelled its previous mobile money service in 2016, after it failed to gain traction in a market dominated by major banks. In the same year, MTN's competitor, Vodacom, also shut down its mobile money service, M-Pesa, due to poor local demand.

Vodacom had launched M-Pesa in 2010, targeting to reach 10 million local users. But only 76 000 users had signed up in 2015, as Fin24 reported.

But with the roll-out of the new platform, MoMo, MTN says the time is ripe for the service, which is targeted at the unbanked or under-served segment of the market. Apart form sending and receiving money, MoMo offers users a range of financial transactions from their smartphones, such as purchasing airtime, data bundles and prepaid electricity.

In an interview with Fin24, Felix Kamenga, MTN Chief Officer Mobile Financial Services, said he believed that the South African market had grown over the past five years and become more receptive to online services.

"I am happy that there are so many different players, compared to being a lone voice. It speaks to the fact that the market is ripe and receptive," said Kamenga.

In a market dominated by well-established banking systems, it is estimated that there are still around 11 million South Africa without access to financial services, and MTN is gunning for a slice of that population, as well as those who seek alternative cash service solutions.

Players like Capitec have made great inroads in the lower end of the market, while the industry has seen a major shake-up from digital innovators such as TymeBank, who are jostling for the under-served groups. It's a development likely to present a tough competition for MoMo.

However, Kamenga is adamant that the new banks complement, rather than compete with MoMo. MTN has set itself a target of reaching at least a million customers within the first two years.

"Getting the numbers is important, probably the biggest measures of success, and breaking even is on the roadmap," said Kamenga.

MTN, Ubank launch mobile money service

According to Imtiaz Suliman, analyst at Sentio Capital, MTN would have a "quite a difficult time" cracking the challenging market, which has significantly evolved over the past five years.

"The market structure is more competitive than before, the big four banks are well entrenched, and the market they are targeting has low disposable income," said Suliman.

He acknowledged that the company would offer a niche service in a small area.