Johannesburg - Trade union Solidarity’s latest probe into how much it costs South Africans to bank has found that competition in the sector is benefiting consumers.
In its latest report - Bank Charges Report 2016 - the union says Absa, FNB, Nedbank and Standard Bank are increasingly competing with Capitec.
Its results - for the seventh such report - shows that Capitec is still the most cost effective bank for low- and middle-income earners, and Absa wins at the top end of the scale. However, the gap is narrowing when it comes to competing to offer basic services to low-income earners.
Solidarity says, when it comes to the costs of accounts marketed to the middle class, the differences in the costs of these accounts remain relatively small, as was the case last year.
Paul Joubert, senior researcher at the Solidarity Research Institute, says the fierce competition among basic bank accounts includes Nedbank as well this year.
“Unlike in the past, Nedbank, with its new Pay-As-You-Use account, now also competes well with the cheaper accounts offered by Capitec, Absa, FNB and Standard Bank. All Capitec’s big competitors are now imitating Capitec’s low cost account model.”
Joubert adds, at the middle-income level, the lower cost of bundled accounts has had the effect of pushing pay-as-you-transact (PAYT) accounts out of the market. “In the past three years, the phasing out of PAYT accounts has been a remarkable phenomenon. Nedbank and FNB have already stopped marketing PAYT accounts to the middle class entirely,” Joubert explains.
With regard to the bundled accounts marketed to the middle class, little has changed, with all of them costing about R100 a month, the union has found.
“Although there is a minimal difference in cost between the bundled accounts, strong competition at this level still exists between the banks. After Capitec’s account, Standard Bank’s Elite Plus account remains the cheapest in this category, as was the case last year,” Joubert notes.
Joubert believes strong competition among accounts marketed to middle-income earners shows other factors such as reward programmes are increasingly influencing clients’ choice of a bank.
“However, it seems as if most banks are curtailing their rewards programmes, for instance by making it more difficult to reach a high level of earnings in the programmes. Therefore, clients interested in these rewards programmes should be aware of the fact that the terms and conditions of these programmes could change often – as in the case of FNB’s eBucks rewards programme recently,” Joubert points out.
IOL