Banking fees have been the bane of customers for ages, which is why savvy banks have lured new customers by pitching their fees lower than the competition and encouraging the switch to mobile banking.
It’s the reason Capitec has grown so rapidly in recent years: loosening the choke-hold that the big four - Absa, First National Bank (FNB), Nedbank and Standard Bank - had on the domestic market, by bringing banking to the people with simpler products and more affordable fees. Last year, Capitec was voted the best South African bank - for the third consecutive year - and it was one of only eight that achieved a five-star rating.
This year, tech-driven digital-first banks such as TymeBank, Discovery Bank and BankZero, hope to outpace Capitec’s innovation, by offering more control, cheaper pricing structures, greater convenience, better interest rates for savers, even simpler products and personalisation.
Banks might be moving online, but tech won’t fully replace the psychological need for personalisation. Banking, after all, is also about building relationships, and if customers can’t enter a physical store to speak to a manager or consultant, they want a bank that hasn’t lost sight of its human market.
Switching to digital banking might be one way reducing fees - but if you’re happy with your bank, there are ways to stay where you are and maximise your experience.
Francois Viviers, the executive of marketing and communications at Capitec Bank, said when cutting back on spending, most people overlook the cost of their bank fees.
“Check your bank statement to see what you are paying. Most bundle accounts cost from R100 a month. Do you really need all the services offered in the bundle? With a pay-as-you-transact account, such as Capitec’s Global One, you only pay for the transactions you actually do. In 2018, over 6.7million Capitec clients paid less than R50 a month in fees.”
Digital banking transactions are often more affordable than those involving cash or branch visits. Make sure you are making full use of your bank’s app. It will save you not only money, but time too.
Viviers said setting financial goals at the beginning of the year is important, because without a proper financial plan, you’ll likely spend money on things that don’t matter and miss your goals.
“Financial goals, backed by a plan, give you a road map to follow. It also allows you to select the best financial tools to use when achieving your goals. For instance, keeping your money in a cheque account will earn you no interest. Placing your money in a savings plan will, on the other hand, put the power of compound interest in your corner.”
For Ancley Jacobs, the chief executive of FNB Consumer Core Banking, smart technology has been a game-changer for consumers and banks because of improved convenience, safety and reduced cost. But consumers are “barely scratching the surface when it comes to exploiting the benefits of digital platforms for day-to-day banking”.
Jacobs said there are easy ways to reduce bank fees. “When it’s necessary to use cash, you should rather withdraw at shopping tills for a fraction of the cost. If you need to use an ATM, it’s cost-effective to use your bank’s ATM to avoid incurring additional charges at other banks. Alternatively, FNB customers can easily pay anyone with a cellphone number via eWallet Send Money, thereby eliminating the need and costs associated with using cash.”
Card swipes at till points are free with most banks and consumers can earn rewards for swiping.
“You can make safer payments through tap-and-pay functionality, which allows you to complete a payment without losing possession of your bank card.”
Avoid unnecessary bank charges by ensuring that you have sufficient funds in your account: you’ll incur charges for returned debit orders, as well as attempted purchases with insufficient funds.
Jacobs advised not multi-banking - it can cost you more money, because you are servicing multiple accounts. Consolidate your banking to ensure that you get maximum benefits at a reasonable cost.
“There is no better time than the beginning of the year to get your financial affairs in order. Getting a handle on bank fees can set you on the right path and create room for you to be more efficient in managing your money.”
Cowyk Fox, the managing executive for Everyday Banking at Absa, suggested selecting the right type of account. “If your banking needs are plain and simple, daily transactional banking, then a transmission account or our Flexi Value Bundle will better suit your needs. We also have accounts specifically designed to cater for the needs of youth, student and senior customers.”
Fox said value bundles (including premium banking) were the most cost-effective solution at a fixed monthly fee. “Our value bundles include a number of everyday transactions and discounts for maintaining a set amount of money throughout the month. This all could translate into massive savings on bank charges.”
But if you do few transactions on your account, then pay-as-you-transact pricing options are better.