File photo: Candice Chaplin.

Johannesburg - Banking charges are becoming more affordable to customers due to stiff competition by South African banks, according to the seventh bank charges report by Solidarity Research Institute (SRI).

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The report analyses transactional accounts from banks, including Absa, Nedbank, Standard Bank, Capitec and First National Bank (FNB).

Paul Joubert, a senior researcher at SRI, said that as a result of strong competition in the basic bank account market, all four major South African banks were keeping the cost of these accounts relatively low, as was the case last year.


Joubert said: “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. Therefore, all Capitec’s big competitors are now imitating Capitec’s low-cost account model.”

But when it came to middle-income banking clients, Joubert said the lower cost of bundle accounts 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 have been a remarkable phenomenon. Nedbank and FNB have already stopped marketing PAYT accounts to the middle class entirely.”

With regard to the bundled accounts marketed to the middle class, little has changed, with all of them costing about R100 a month, Solidarity found.

He said that for middle-class accounts after Capitec’s account, Standard Bank’s Elite Plus account remained the cheapest in this category.

Francois Viviers, an executive for marketing and corporate affairs at Capitec, said their approach had never been to segment the market according to income or any other measure.

“Why should a professional person pay more in bank fees, or a low-income earner or student receive a lower level of service? This is a traditional approach to banking and in our view it is not in the client’s best interest,” Viviers said.

Viviers said Capitec had developed its Global One savings plan solution to offer the best value for money and good service to all South Africans, no matter how much they earned.

Viviers said competition with other banks was healthy and good for consumers. “We keep a close eye on our competitors and take them very seriously. We look at our clients and determine what they really need from the bank, and we use that insight to maintain a pioneering banking offer.”

Reward programmes were increasingly influencing clients’ choice of a bank, according to Joubert. “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.”