South African banking customers could one day switch banks and keep the same account details – in the same way they are able to switch mobile networks while keeping their numbers.
This is one of the plans under consideration by the Reserve Bank, according to deputy governor, Kuben Naidoo, in an interview with Business Day.
2019 will see a flurry of new banks open in South Africa, with many in the late stages of testing.
Because of the burgeoning activity in the banking sector, Naidoo said that the Reserve Bank’s Prudential Authority has introduced new tools to enhance competition and supervise the sector.
One of these is depositor insurance, which will encourage people to bank with the new entrants by giving guarantees on retail deposits – while ‘account portability’ is also being considered, which will make it easier for customers to switch between banking groups.
What is bank account portability?
Bank account portability would enable customers to switch banks, while keeping their account number, and not have to open a new account.
The systems has not yet been implemented anywhere in the world, with India aiming to be the first.
India’s central bank met with banking groups in 2017 to talk about introducing account portability in a bid to boost competition in the banking sector.
The function would help traditional banks compete with new digital entrants, the central bank said, and was seen as “the next logical step” in making the banking system less restrictive and consumer friendly.
According to analysts, however, the system faces some challenges – primarily the sheer number of bank accounts, and no uniform numbering format among the banks. All accounts would also need to be linked to a central database (for India’s equivalent of FICA), and the banks would have to cover the costs of changing their systems to make portability possible.
For South Africa, the Reserve Bank said that bank account portability is not yet officially under discussion, but it is a recommendation from a World Bank study commissioned by Treasury.
New banks coming to South Africa
South Africa’s ‘big five’ local banks (Nedbank, Standard Bank, Absa, FNB and Capitec) face similar competition from digital entrants.
Discovery Bank, TymeBank and Bank Zero will all launch in 2019 as fully digital banks, while TymeBank has already launched, with users able to sign up and transact on the account.
Bank Zero has said that the group’s name hints at what its fee structure will look like, while Discovery Bank will focus on ‘behavioural banking’, where much of the account will be tied to customers’ spending habits, with those who manage their finances well getting the greater benefit from the account.
African Bank will also re-enter transactional banking through MyWORLD account, while Bidvest Bank has recently launched its Grow Account – both of which are more traditional banking accounts with competitive pricing.
These are the projected launch dates of the country’s new banking projects:
- Bidvest Bank Grow – launched
- TymeDigital – soft launched, full launch Q1 2019
- Discovery Bank – March 2019
- African Bank MyWORLD – H1 2019
- Bank Zero – Mid-2019