Consumers win as disruptors force banks to lower fees


Fierce competition launched in the banking sector by the likes of Tymebank, Discovery Bank and African Bank has proven to be what consumers needed to get better treatment.

According to Solidarity’s 10th annual bank charges report released on Tuesday, banks are now offering better benefits to their customers at lower prices to protect their market share.

"Banks attempted to be winners in the market with a combination of better benefits and reduced bank charges," said Monica Mynhardt, researcher at the Solidarity Research Institute.

The findings of the report should not be a surprise, given that three of the big four banks either launched zero-fee accounts or cut prices on their entry level products earlier this year.

Absa was the only bank that chose not to cut fees on its entry-level day-to-day bank account in response to Tymebank and other no-fee challengers in 2019. (Its 2020 fee schedule shows that it will be reducing the monthly fee on some of its products, including the entry-level Transact account.)

Nedbank was the first to join in on the no-fee challenge in March, shortly after Tymebank’s official launch in February. Tymebank launched its no-fee account in November but officially went to market in February.

Nedbank responded by launching youth-targeted e-commerce platform, called A month later, it dropped the monthly account fees on its pay-as-you-use (PAYU), which took the number of no-fee accounts to three.

Standard Bank followed closely in May, launching an account that undercut Capitec’s offering by just 5c. At the same time, it gave new customers more than 10 times in airtime and data benefits what they pay in monthly fees.

In the same month, FNB slashed fees on its pay-as-you-use account and cut numerous other fees on its bundled bank accounts.

Capitec a winner

Mynhardt said Capitec, which is now the biggest in the country terms of customer numbers, still offered better value than its incumbent peers in two out of three categories of banking requirements. It was not measured in the third.

The report does not yet cover the new entrants. It only looked at Absa, FNB, Standard Bank, Nedbank and Capitec.

The assessment was based on four customer profiles; those who make 12, 17, 25 and 30 transactions each month, ranging from cash withdrawals, purchases and payments.

"Capitec is still the only bank that offers good interest rates on transactional accounts, which can help a user with a minimal balance in their bank account reduce their bank charges even more," explained Mynhardt. She also said that Capitec remained the cheapest bank for users who have no need to participate in a rewards programme.

Newbies Tymebank, Discovery Bank and African Bank’s MyWorld also offer interest on positive balances in the transactional accounts.

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