It pays — in fees and interest — to shop around for a bank

Looking at the bank fees charged by Absa, FNB, Nedbank and Standard Bank on accounts aimed at clients in the middle-income segment, you wouldn’t say there was any competition for your business.

But FNB has not increased the R105 monthly fee levied on its mid-level Gold bundle account this year — the most expensive bundle account in the market, according to a report released last year.

The bank is the last of the “big five” to apply its annual fee increases, effective from the beginning of last month.

Absa and Standard Bank increase their fees in April, Capitec in March and Nedbank in January.

Ryan Prozesky, the CEO of FNB Consumer Core Banking, said that while pricing is a component of FNB’s transactional value proposition, the bank is focused more on improving the overall customer experience at FNB.

FNB’s Gold bundle account is comparable with Absa’s Gold Value Bundle, Nedbank’s Savvy Plus and Standard Bank’s Elite account on the bundled option. With a bundled option, you pay a monthly fee for a bundle of transactions. When you exceed the number of transactions in the bundle, you pay per transaction.

Capitec’s Global One account, which is still the only account offered by the bank, is a pay-as-you-transact account popular with consumers at the low end of the market. Yet the account increasingly appeals to people with more sophisticated banking needs, more so since the launch of a credit card by the bank late in 2016. Over the past financial year, Capitec grew its total client base 15% to 9.9 million clients.

Charl Nel, the head of communications at Capitec, said the number of middle-to high-income banking clients — clients with a net income of R15,000 and more — had grown 28% in a year.

Bank clients in the middle-income segment are more likely to have higher average balances than those who earn less. Since Capitec pays interest — at a rate of 4.85% — on a positive balance, this is where the bank’s Global One account “really comes into its own”, the 2017 “Solidarity Bank Charges Report” notes. The higher the balance, the more interest a Capitec client will earn.

Last year, the Solidarity Research Institute found that when comparing the mid-level accounts offered by the big four banks, Nedbank’s Savvy Plus account was marginally cheaper than the competition, with very little difference in their charges.

But Capitec’s account was “significantly cheaper” than its nearest rival in this category, even when no interest or minimal interest is considered, Solidarity found. “When the effect of interest is considered, the gap only grows. Any client with a middle-class income who does not need a host of additional banking features would save money by having a Capitec account instead of a competitor’s account.”

Depending on the number and type of transactions you make in a month, you could be paying less on a pay-per-transaction basis with Capitec than on a bundle account with another bank. For example, assuming you have eight debit orders (with fees of R3.73 for each), make eight app payments (at R1.60 each), draw cash twice a month from a retailer (at R1.61 each) and once from another bank’s ATM (R8.83), your bank charges, including your R5.80 monthly fee, plus SMS notifications, would be less than R80 a month.

Absa offers its Gold account in bundle form only, having dropped the “very expensive” pay-as-you-transact option last year, according to Solidarity. FNB and Nedbank have also dropped their pay-as-you-transact options on these accounts. Standard Bank, however, still offers a pay-as-you-transact version of the Elite account, but it is “significantly more expensive” than the bundle option.

FNB’s Gold account was the most expensive of all the bundle accounts on offer last year, Solidarity found. Its 2018 report on bank charges is due this month.

For clients who like to make use of banks’ rewards programmes, the FNB Gold account offers the advantage of a subscription to FNB’s eBucks programme at no extra cost, unlike the other banks, which charge an additional monthly fee for participation on most accounts, Solidarity said.

Absa charges R23.20 a month for access to Absa Rewards, Nedbank charges R20.18 for access to Greenbacks (it’s free on the Savvy Bundle account), and Standard charges R22.19 a month for membership of its UCount programme.

With such small cost differences between the middle-income market bundle account from Absa, FNB, Nedbank and Standard, other factors will likely sway clients in their choice of bank, Solidarity said. Among these factors are things as basic as the location of branches or the friendliness of staff at a specific branch, but as electronic banking becomes the norm, these physical factors become less significant.

FNB was recently rated SA’s best digital bank for 2018, offering the best mobile and internet banking, according to the latest “SITEisfaction” report by market research company Columinate. FNB narrowly beat Capitec for the top spot.

Launched in 2012, Columinate’s “SITEisfaction” survey is an annual measure of customer satisfaction with digital banking services in SA and rates each bank with a score out of 100.

Users gave FNB a score of 75 for internet banking, 82 for mobile banking (mobile apps to mobi-sites for both phones and tablets), and 79 for digital banking. Capitec scored 70 for internet banking, 80 for mobile banking and 77 for digital banking.

Columinate said FNB’s rise in satisfaction levels was not as prominent as Capitec’s decline in satisfaction levels.

“This declining three-year trend may cost Capitec its reputation as a disruptor, and is likely due to Capitec’s customers punishing the bank for the platform’s frequent unavailability.”

Despite this, Capitec still outperformed Nedbank, Standard Bank and Absa by a large margin.

Nedbank came in third position with scores of 60, 70 and 66 for internet banking, mobile banking and digital banking, respectively. In fourth position was Standard, which scored 55 for internet banking, 70 for mobile banking, and 63 for digital banking. The bank with the lowest scores was Absa, with 48 for internet banking, 63 for mobile banking and 56 for digital banking.

ardea@tisoblackstar.co.za