Banks moving towards bundle accounts, bank charges stagnate - Solidarity

The charges of the cheapest mainstream accounts of four of the five large commercial banks in South Africa remained virtually unchanged over the past year. Standard Bank was the only significant exception, as the bank closed its most competitive mainstream account for new clients after just one year.

These are just a few of the findings in the fourth annual bank charges report of the Solidarity Research Institute (SRI). The report compares the bank charges of different personal bank accounts of the five large commercial banks, namely Absa, FNB, Standard Bank, Nedbank and Capitec, with each other.

Paul Joubert, senior researcher of the SRI, says Standard Bank's Achiever Electronic account could compete well with the other banks' bundle accounts in 2012. ‘Standard Bank's decision to do away with this account resulted in the bank's Elite Plus account now being the most expensive of the five banks' cheapest mainstream accounts. The other four banks kept the cost of their cheapest mainstream accounts virtually unaltered.'

The report shows, among other things, that most banks are strongly moving towards bundle accounts at the expense of pay as you transact (PAYT) accounts. Joubert says this trend is limiting clients' choices. ‘A situation where there are fewer choices is not necessarily bad, but bank charges seem to be stagnating at a level of around R80 to R100 as a result of this trend. At the "Big Four" banks, the fees of each individual transaction on the PAYT accounts have become so high that clients are in effect forced to open bundle accounts instead. Capitec, however, still offers a cheaper PAYT alternative with minimal fees per transaction.'

Since 2012, all of the "Big Four" banks have introduced new accounts aimed at low-income individuals - a development that was apparently prompted by Capitec's success in this market segment. According to Joubert, none of the other banks had previously been able to compete on cost with Capitec on this level.

‘FNB, however, significantly decreased the fees of its EasyAccount this year and this account is now for the first time able to beat Capitec on cost. Absa's Transact account also competes well with Capitec in terms of cost, but the Transact account does not offer Internet banking services and has a daily limit of R2 000 on transactions, making this account totally impractical for many people.'

The SRI's bank charges report is a lot more user friendly this year. It serves as a guideline for people who want to evaluate their bank charges, but each person's banking habits are unique. People must therefore still make final decisions on the basis of their own banking habits and preferences.

Download the full report: click here.

Statement issued by Paul Joubert, Senior economic researcher: SRI, August 20 2013

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