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If last year’s buzzword was “disruptor”, then this year’s is surely “fees have fallen”. And Discovery’s just upped the ante with the launch of a behavioural bank that incentivises customers to save, invest and live within their means to improve long-term financial health.

It seems to have the upper hand: leveraging off its existing client base of Discovery Card members, who will be moved on to the full-service banking platform. Phased in over the next four months, the transitioning process will culminate with opening full access to the bank’s products to a wider customer base.

Discovery’s shared-value model - which positively reinforces good behaviour - rewards customers by encouraging them to improve their financial health by offering guidance, rewards and motivation - rather than penalising clients for deposits and withdrawals.

It conducted a comprehensive study of banking fees in South Africa, reviewing over 600000 transactions worth more than R800million.

The bank said: “The study reveals an overall average monthly bank fee paid by banking clients of R206 a month. Broken down by income group, the average bank fee ranges from R132 a month (low to medium income), to R214 a month (medium to high income) and R309 a month (high income).

“The study compares the average fees to income, to show that consumers pay 0.3% to 0.6% of their salary in banking fees. Those in lower income segments pay a higher proportion of their salary in fees than the high income segment.”

This, it notes, is because pay-as-you-transact fees affect low income earners the most and bundle fees are more efficient for high income earners.

The most significant finding was that consumers should collectively consider their fees, the interest they earn, and the rewards and/or incentives earned when choosing their bank accounts.

Discovery also seems to be going after Capitec clients, with interest rates starting at 5% and increasing according to Vitality status.

Capitec, though, has just been announced as having the highest customer satisfaction index in this year’s release of the Consulta report.

The report found Capitec had attained an overall ranking of 84.9, the highest score achieved out of seven in a survey taken by over 15000 participants.

Capitec’s likely to retain many of its loyal customers too, because of its cachet with lower-income - and increasingly mid-income earners, who have warmed to the simplified, easy and affordable banking model that’s focused on efficient service and digital banking.

The study found traditional banks to be under strain: with increased customer expectations and an inability to get the basics right, the sector needs an overhaul to make banking sexy again. And with consumers under pressure, why should they pay a bank that earns handsome interest on their money already, transactional fees?

The study looked at the level of satisfaction of customers of the big six retail banks - Capitec, FNB, Nedbank, Absa, Standard Bank and African Bank - and predicted 2019 would be a watershed year for the sector as traditional banks face intense competition from Discovery Bank, Bank Zero and TymeBank.

“In such an environment,” the authors noted, “customer satisfaction is a dealbreaker when it comes to how much market share is lost to new entrants.”

The survey is the largest of its kind for the banking sector, surveying 15542 consumers from across the country. It links customer expectations, perceived quality, and perceived value to customer satisfaction, which in turn is linked to customer complaints (and recovery), and customer loyalty intentions.

Capitec’s been a consistent performer in the customer satisfaction score, bettering all brands by a significant margin for the sixth consecutive year.

It’s followed by FNB, with Nedbank and African Bank overall on par with the industry average for last year. Absa, which is under strain, and Standard Bank - which has just announced over a 1000 possible retrenchments - are below average.

More competition should work in consumers’ favour - banks will be forced to innovate to keep up with the digital “disruptors” or be left behind.

Consulta notes that Capitec cannot be complacent about its low fees because other banks have reacted with comparable fee and costing propositions, “but what Capitec does very well is to reduce total customer costs in terms of reduced red tape, less documentation, more speed, efficiency and convenience, which translates into perceived value”.

By getting the basics right, Capitec outperforms the competition by a large margin: it has the lowest complaint incidence ratio (10%), which is in line with global benchmarks, and a high complaint resolution rate. But the other banks have some way to go - on average, 150% higher than the international benchmark of 10%.

This year will be a game-changer for the sector with increased rivalry and new entrants hungry for the business.

With one in four customers ready to defect, Consulta says banks have reason to be concerned, because established banks are not customer-centric enough and could lose ground rapidly.

PERSONAL FINANCE