SA banks increasingly competitive, transparent – report

Henry

South African banks are becoming more competitive and transparent, according to the Solidarity Research Institute’s (SNI) latest bank cost report.

Theuns du Buisson, economic researcher at the SNI, says this year’s report – which is purely focused on bank costs – shows a significant increase in transparency regarding bank costs among the big banks in South Africa.

The banks focused on in the report include Absa, FNB, Standard Bank, Nedbank and Capitec, TymeBank and Bank Zero are also included in the online category.

The importance of a good, user-friendly tariff sheet is briefly discussed in this year’s report.

“Nedbank has greatly simplified their rate structure and the layout of their page is also now easy to understand. It is more difficult this year than in the past to figure out FNB and Absa’s rate sheets because of a layout that forces one to scroll between specific rates and included rates, especially in their bundled accounts,” says Du Buisson.

Another finding of the report is that customers who have no need for branches and extensive banking services get by far the best value from the online banks such as TymeBank and Bank Zero.

“To do the 14 transactions in our basket at these banks costs R14 and R17 respectively, while it would cost R41.25 at the nearest competitor among the traditional banks.

For consumers with basic banking needs, FNB’s Easy PAYU account once again reigns supreme in the 12 and 17 transaction baskets this year.

“They simply include more free deals than any of their competitors. Where it seems that other banks have decided to no longer market so aggressively to the low-income market segment, FNB is clearly still ready to offer accounts to everyone,” says Du Buisson.

Also in the middle income profile, with a basket of 25 transactions, FNB’s Fusion Aspire account is the winner. The monthly rate of R99 includes all the transactions in our basket, apart from the purchase of electricity. Capitec is in second place, but cannot really compete in this category because it does not offer significant additional value such as an extensive rewards program. If Capitec is left out of account, Nedbank is in second place, especially because all transactions in our basket are included in their monthly amount of R109.

For consumers with sophisticated banking needs, Nedbank’s MiGoals Premium account is the cheapest, with a total cost of R240 compared to FNB’s Fusion Premier account which would cost R247 per month for the 30 transactions in our basket.

“Nedbank has clearly learned from FNB’s win in 2023 by including the most free transactions in the monthly rate this year. So this year they could be the cheapest in this category, and also be extremely competitive in the category for middle-class income accounts, while last year they were the most expensive.

“Innovation in banking is therefore possible,” says Du Buisson.

He says that although there may still be secrecy when it comes to reward programs, all the banks with which Solidarity has had contact have agreed that more transparency is also needed.

“You can already see this at most banks and we will definitely analyze reward programs again in next year’s report.

“While consumers are reeling under the pressure of increased interest rates and inflation, banks are becoming more competitive year after year. Although the online banks are by far the cheapest for most consumers, one must take into account that the traditional banks’ reward programs at least allow you to get something back as well. We hope to analyze the new programs promised by banks next year.”

Read the complete report here.