This year’s Bank Charges Report by the Solidarity Research Institute, its ninth report, may give you a sense of déjà vu.

The themes, if not the results, have remained the same for  the past four years: competition among banks for consumers in the low-income segment of the market, thanks to Capitec, which is generally the cheapest option for a large segment of the population; the continued demise of pay-as-you-use options on accounts aimed at consumers in the middle-income market; and the value derived from belonging to a loyalty programme offered by a bank,  which could offset some of the costs of transactional banking.

Until 2015, the report was very much  a Capitec story, with the newbie a clear front-runner based on fees alone. That was before FNB and Absa began snapping at Capitec’s heels, with their Easy and Transact accounts, respectively. Standard Bank’s Access account on the pay-as-you-transact option was not far behind.

This year, for the first time, an outsider — Old Mutual Bank — beat Capitec on fees alone in the category for low-income earners. But when the interest paid by Capitec on its  Global One account is taken into consideration, it is still the cheapest account.

This year’s report says that “in general, Capitec remains the cheapest account for anyone who keeps an average balance of only a couple of hundred rands in their account …  That said, Absa’s Transact and Old Mutual’s Money accounts are also compelling propositions. A client with a very low income who rarely, if ever, holds funds in his or her account would be able to bank more cheaply at Old Mutual or Absa [than at Capitec].”

Middle-income earners can also make “significant savings” on bank charges by banking with Capitec. The bank’s only real limitation is the lack of a rewards programme, the report notes.

“For someone with a middle-class income who prefers a rewards programme, FNB would be the cheapest account in this profile, with access to eBucks.”

Click to enlarge

Solidarity reckons middle-class customers would probably be averse to banking with a less-established bank but  says Old Mutual offers a good value proposition for middle- and high-income earners who want a no-frills account. I disagree. Capitec has managed to attract middle-income earners in their droves, thanks in part to strong marketing. Old Mutual, too, could entice thrifty consumers in this segment.

For high-income earners, Standard Bank’s Prestige Rebate account offers good value to those who can afford to leave R10,000 in a transactional account, the report says. But “on just pure bundled fees, Nedbank’s Savvy bundle comes in the cheapest” for consumers who are big earners. The report notes, however, that at this level extras and rewards programmes are most likely what will sway customers.

This year’s report notes that neither Old Mutual nor Capitec allow customers to send money via an instant payment service such as those offered by the big four: Absa’s CashSend, FNB’s ewallet, Nedbank’s iMali, and Standard Bank’s Instant Money. “The absence of this functionality might put customers off,” says Solidarity.

Instant money services enable you to send money to someone who doesn’t have a bank account. The sender transfers the money via mobile or internet banking. The recipient gets an SMS with a unique code, which is used to draw the money from any of the sending bank’s ATMs. The recipient doesn’t need their own bank account or card to withdraw the cash.

These services are not only attractive to consumers at the low end of the market;   they offer a safe and easy way to make immediate payment to anyone with a cellphone.

Similarly, a good loyalty programme could be appealing. We are apparently a nation that’s mad about them, with 75% of economically active South Africans using them, according to the Truth & BrandMapp Loyalty white paper released last week.

Women belong to about six programmes apiece and men to about four, it  says.

Insights contained in the white paper are derived from the responses of more than 25,000 economically active South Africans who took part in an online survey.

According to the report, all the banks see their loyalty propositions as helping consumers in cash-strapped times. Those with partnerships with grocery and fuel retailers say  rewards “really help their customers”.

With more competition on the horizon with the launch of Tyme Bank before the end of the year, followed by Discovery Bank and Bank Zero next year, it’ll be interesting to see how the big five innovate to maintain market share, and who will be able to compete with a bank that has “zero” in its name.

It seems certain that a price war is in the offing.