Cut banking costs says Solidarity
Banks needed to innovate to cut the costs of banking for consumers, trade union Solidarity said on Tuesday (20 August).
“New innovation is needed to shake up the market because it is stagnating a bit at the moment to some extent,” senior researcher at the Solidarity Research Institute Paul Joubert.
“What we hope to see is that the banks will still have some competition but that one of the banks will come up with a new innovation… We would like to see someone coming in and under-cutting the level of costs.”
He said in 2012 the cost of banking dropped, but in 2013 it stagnated. This was however a better picture for consumers.
Joubert was speaking in Centurion at the release of research that compared charges for personal bank accounts offered by Absa, FNB, Standard Bank, Nedbank, and Capitec.
He said the report made it easier for people to compare costs and select the cheapest option.
“Because that happens, banks see they can gain market share by innovating, so they start innovating. This sets off a chain reaction and consumers use their power to regulate the sector themselves in terms of cost.”
Joubert said the cost of banking has remained unchanged in the past year, with the monthly bank costs between R80 and R100.
“Bank fees are a lot better than in previous years. Overall I would say it is good news in most aspects.”
He said the four main banks, FNB, Absa, Standard Bank, and Nedbank were consolidating costs. Capitec only had one account and the interest paid on positive balances could potentially cancel out bank charges, according to the report.
Joubert said most prices stayed the same as in 2012. Standard Bank was the only exception after the bank closed its most competitive mainstream account to new clients.
“Standard Bank took away the Achiever Electronic account, therefore they are not as competitive.”
The account was still available for existing consumers but not available on a new account. As a result the bank’s Elite Plus account was the most expensive of the five banks’ cheapest mainstream accounts.
According to the report the cheapest mainstream account in 2013 was Capitec’s Global One Account, which cost consumers R52.02 monthly, followed by FNB’s Smart Unlimited at R53.20 monthly.
Absa was third with its Silver Value Bundle at R82 per month, Nedbank’s Savvy Current was R97 monthly, and Standard Bank’s Elite Plus account charged R102.40 monthly.
Capitec and Nedbank lowered their charges, while FNB’s and Absa’s charges remained the same during the year.
According to the report, most banks were moving towards bundle accounts at the expense of pay-as-you-transact accounts which limited clients’ choices. Joubert said charges on these accounts had become too high for consumers who would rather pay a fixed amount for all transactions.
“Capitec is an exception. But the other banks’ charges are so high that you only need to do a small amount of transactions per month but your costs would be higher than you would pay on a bundle account,” he said.
“In that sense, people are almost forced into having the bundle accounts.”
Joubert said FNB significantly decreased the fees on its Easy Account this year to target low-income consumers. He said FNB beat Capitec on cost on this level for the first time after Capitec’s success in this market.
Absa’s Transact account competed well with Capitec on cost, but did not have benefits like internet banking. Joubert said the research did not compare accounts for pensioners and students.
More on SA banks
More on South African banks
Is Capitec really the 4th biggest bank in SA?
South Africa’s favourite bank surprise
Banks to reduce branches by a fifth?
Loading ...
