Banks compete with lower charges

According to the latest Solidarity Research Institute (SRI) bank charges report, South African Banks are being forced to make charges more affordable for customers.

The report focused on analysing transactional offerings from the major banks like Absa, Capitec, Standard Bank, First National Bank (FNB) and Nedbank.

Senior researcher at SRI, Paul Joubert, reportedly added that as a result of tight competition in the basic bank account market South Africa’s major banks seem to be keeping their basic account offerings relatively low.

FNB is one such bank that has responded by offering competitive market related products and transactional account pricings for a number of 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,” stated Jo-Ann du Plessis, FNB’s pricing executive.

Absa has similarly committed to “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 only product in 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,” said Jan Moganwa, chief executive of customer solutions, retail and business banking.

Other banks such as Nedbank have also jumped on board with the implementation of their new pay-as-you-use account, Joubert reportedly added. This account has enabled Nedbank to now compete with other banks such as Capitec, who seem to be leading the pack in terms of low-cost 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,” stated Tshegofatso Selahle, Nedbank’s communications manager.

The popularity of these lower cost accounts have even filtered through to the middle-income banking market as pay-as-you-transact (PAYT) accounts seem to have been side-lined. With the result that bank’s such as Nedbank, FNB and Absa have slowly stopped marketing PAYT offerings to their middle class customer bases. 

“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,” stated Moganwa.

Standard Bank has also joined in with their Elite Plus account just coming second to Capitec’s account in the middle-class account market.

“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 Charl Nel, Capitec’s head of communications.

Banks are further sweetening the deal by adding other free facilities to their account offerings. FNB for example, 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,” said du Plessis.

Competition in the market has in this way benefited the consumer as banks are being forced to rework their offerings in order to compete with other accounts on the market and stay relevant.

The key being to tap into the idea that South Africans regardless of how much they earn should be privy to the same quality of service, which is a notion that Capitec is largely centred around.

It is in this vein that FNB have implemented and promoted their eWallet offering, aimed at the ‘irregular’ income earner.

“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 stated.

Capitec added that it would be launching a credit card in the near future, aimed at putting them in a better position to compete in the high-income earners market too.

*Standard Bank was unable to provide comment at the time of publication.

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