Standard Bank is willing to pay you to keep your money
The bank’s new account will cost 5c less than Capitec’s and comes with free monthly airtime or data
Standard Bank has launched a new entry-level account, which will see it technically pay customers for banking with it.
The new transactional account, called MyMo will cost R4.95 per month and comes with R50 free airtime for voice calls or internet access for customers using a Standard Bank sim card. The bank will also give customers a megabyte of data each time they spend R20 on purchases. Like FNB, Standard Bank is piggybacking on Cell C’s cellphone network to offer voice and data packages.
The big four banks are facing stiff competition in the entry-level segment of banking as new entrants, including TymeBank, Sasfin and African Bank, have taken transactional fees to rock bottom.
Standard Bank, SA’s largest bank by assets at R2.1-trillion, is the second of the big four to join the price war. Nedbank scrapped fees on its existing entry-level account in April after launching two other zero-fee accounts.
Standard Bank however said its new product was not a reaction to what other banks are doing. Instead, said the bank, it has been upgrading its core banking system for 10 years.
“In reality we were not able to do much innovation because we were busy fixing the back-ends,” said Standard Bank’s CEO for personal and business banking Funeka Montjane.
Analysts said while at face value it might look like Standard Bank will make a loss, the bank would likely make profit to subsidise the free benefits from lending margins and from the interchange fees when customers swipe cards at retailers. And since these digital accounts tend to be taken up by younger people, they presented a tool for Standard Bank to acquire customers early in their life and sell more to them over time.
“If an account attracts a significant amount of new deposits into the bank, the deal could still be lucrative overall,” said 36ONE’s Wessel Badenhorst, adding that Standard Bank was likely sourcing the free data much cheaper.
“In other words, the total cost to the bank could be less than what initially meets the eye.”
Another analyst said seeing that the free data will be provided on a Standard Bank mobile SIM card, another strategy could be to increase penetration of Standard Bank’s mobile network. “Once customers have a Standard Bank mobile SIM they will probably buy airtime from Standard Bank and be more loyal to Standard Bank to keep getting their free airtime,” said the analyst.
Montjane said because only 1% of transacting activities now take place in branches, the cost of servicing clients has fundamentally changed at Standard Bank, which is why it can offer a product like this. The bank also said with the free airtime and data it will be giving customers it will be able to trace their digital footprint, which will inform its lending decisions, especially for people with thin credit records.
“If people don’t have a credit record, you have to make decisions based on other data that you have on them, the thin credit bureau strategy. We’ve started testing it particularly on young people who are starting out and we want to extend it, but cautiously,” said Montjane.