When Banks Compete Consumers Benefit

South African Banks are being pressed to adjust their charges to ensure customers can afford them, according to the recent Solidarity Research Institute (SRI) bank charges report.

The transactional offerings of major banks – Standard Bank, Nedbank, First National Bank (FNB), Absa and Capitec were analysed in the report.

Due to the competitive nature of South Africa’s basic bank account market, the major banks appear to be retaining their bank account charges at fairly low rates, said SRI senior researcher, Paul Joubert.

FNB

FNB is one of the major banks that have reacted by offering competitive products and transactional account charges for several years.

“We have not changed our fees on the entry-level Easy account and Gold Account for over two years, currently at R4.95 and R100 per month respectively. This year, we have continued to increase value through our bundled Easy (R49) and Gold Account offerings (R100), by including free FNB ADT cash deposits as well as prepaid airtime purchases.

Customers on these options benefit from free ATM cash deposits up to R4000 and R6 000 per month respectively,” said FNB pricing executive, Jo-Ann du Plessis.

Banks are making their offerings more appealing by adding more free facilities. FNB offers, “free card swipes, cash at till withdrawals, free inContact, free subscriptions to Online Banking, FNB Banking App, and Cellphone banking, as well as free Cellphone banking mini-statements, and free FNB ATM, Cellphone Banking and Banking App balance enquiries,” stated du Plessis.

Absa

In the same way, Absa claims it has been “providing the entry level market with access to simple, transparent and affordable banking solutions. Our Transact account remains one of the best priced products for entry level customers looking for a basic banking product and costs customers a nominal monthly fee of R4.95.

It continues to be the only product on the market that doesn’t charge customers any penalty fees whatsoever – not on rejected debit orders nor on declined transactions, not even for denied Saswitch ATM transactions,” stated chief executive of customer solutions, retail and business banking, Jan Moganwa.

Nedbank

Meanwhile, Nedbank has also stepped up their game by implementing a new pay-as-you-use account, said Joubert. This account will allow Nedbank to compete with Capitec etc., who appear to be pack leaders when it comes to affordable account offerings.

“Nedbank welcomes the findings of the Solidarity report on bank charges published on 4 August 2016. There is a healthy competition in the market within which Nedbank offers great-value products and services to suit all consumer segment needs.

Nedbank understands the financial pressure consumers are under, we care and are constantly innovating to help consumers improve their financial fitness,” said Nedbank’s communications manager, Tshegofatso Selahle.

More affordable accounts have become popular among the middle-income banking market, while pay-as-you-transact (PAYT) accounts have fallen by the wayside.

“We have noticed a steep increase in bundled offer take-up over the last number of years. In fact the majority of our current account base is on bundled offers like Value Bundles,” said Moganwa.

Capitec

In the middle-class account market, Capitec’s account is the most popular, with Standard Bank’s Elite Plus account coming in second.

“Our entrance to the market has brought competition, reducing bank costs in South Africa. We are pleased to note that traditional banks are now starting to emulate our model and cost breakdown,” said Capitec’s head of communications, Charl Nel.

Competition Benefits Consumers

Competition in the banking market benefits consumers, as banks are compelled to lower their offerings, so as to be able to compete with other banks and their account offerings.

All South Africans from all income brackets should have access to quality banking services is the idea that Capitec has.

In line with this, FNB have brought out their eWallet offering, which is catered towards ‘irregular’ income earners.

“The eWallet is completely free of monthly charges and the sender sponsors the customer’s first ATM cash withdrawal. In addition, cash withdrawals at till point are free as are card swipes and balance enquiries,” du Plessis said.

Capitec will also be bringing out a credit card soon in order to help them tap into the high-income earners market as well.