Johannesburg- There is emerging evidence that digital-only banks are disrupting the banking sector, particularly when it comes to bank fees, according to a study by Solidarity.
Solidarity noted in its 2021/22 report that fledgling banks such as TymeBank offered lower banking fees compared to their brick-and-mortar counterparts.
The study zoomed in on fees charged by Absa, FNB, Standard Bank, Nedbank, Capitec, TymeBank, Discovery Bank, Spot Money, and Bank Zero.
The research broke down the market into three segments: low income and basic banking needs; middle-class income and sophisticated banking needs; and higher middle-class income and sophisticated banking needs.
In the low-income bracket, the organisation used accounts marketed to people with a low income (profiles with 12 and 17 transactions a month). It then perused accounts marketed to people with a middle-class income (profiles with 25 transactions a month) and products marketed to people with a higher middle-class income (profiles with 30 transactions a month).
Capitec and Absa are neck-and-neck when it relates to bank charges in the low-income bracket.
The results of the study in the low-income category are as follows:
- Absa transact account is the winner, with a total cost of R37.10 against Capitec’s R37.90.
- However, Capitec eclipses Absa when looking at the 17-transaction profile, with Absa’s costs increasing to R53.85, compared to Capitec’s total fee of R41.90.
- Nedbank was found to have the highest fees for both transaction lists. However, the bank charges no monthly fees.
Things get interesting when it comes to the middle-income category. This is where added benefits like the loyalty programmes are found. The results of Solidarity study found FNB’s Aspire current account emerged as the cheapest account:
- For the Aspire current account one pays R99 a month.
- Second place is highly contested with Capitec’s fees coming in at R102.60.
- Standard Bank is said to charge R129.40.
- Nedbank’s Savvy Plus offering came in as the costliest product at R143, with Absa’s Gold Bundle at R139.
While accounts in the higher-income bracket have a sharp focus on added value and reward programmes than purely on costs, Solidarity said it placed emphasis on comparing costs, and “consumers are encouraged to make sure the added value justifies the extra costs”.
Results of the study:
- FNB was found to be cheaper, charging R236 a month
- Absa followed second, charging R243.50.
- Nedbank and Standard Bank came in as the most expensive with total charges of R267 and R265.60, respectively.
Solidarity said the new kids on the block were giving traditional banks a run for their money. “TymeBank and Bank Zero are following a purely ‘what you see is what you get’ approach. Neither of them charges monthly fees and all transactions that would be charged at traditional banks, such as an e-mail message as proof of payment to the beneficiary, are free of charge at these banks.
“Other services such as purchasing airtime are also free at these banks. For free withdrawals at TymeBank, one first has to get a code on the app, otherwise the fee is R3 regardless of the amount,” shows the report.
Nedbank took exception to being crowned as the country’s costliest bank. “The Solidarity report (section 1.3) acknowledges the comparison of Savvy Bundle does not reflect these added value features, making it a comparison of price, rather than value for money. While cost is very important, we also focus on maximising value for money for our clients.” The bank also said, in support of providing clients lower-cost and more convenient digital banking, there is zero increase in fees on several digital transactions.
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