All four big banks now in fierce competition with Capitec in basic bank account market – Solidarity
10 August 2016
As a result of strong competition in the basic bank account market, all four major South African banks are now keeping the cost of these accounts relatively low. With regard to the costs of accounts marketed to the middle class, the differences in the costs of these accounts remain relatively small, as was the case last year. This is according to the seventh Bank Charges Report, released today by the Solidarity Research Institute.
According to Paul Joubert, senior researcher at the SRI, the fierce competition among basic bank accounts includes Nedbank as well this year. “Unlike in the past, Nedbank, with its new Pay-As-You-Use account, now also competes well with the cheaper accounts offered by Capitec, Absa, FNB and Standard Bank. Therefore, all Capitec’s big competitors are now imitating Capitec’s low cost account model,” Joubert said.
Joubert added that at the middle-income level, the lower cost of bundle accounts has had the effect of pushing pay-as-you-transact (PAYT) accounts out of the market. “In the past three years, the phasing out of PAYT accounts have been a remarkable phenomenon. Nedbank and FNB have already stopped marketing PAYT accounts to the middle class entirely,” Joubert said.
With regard to the bundle accounts marketed to the middle class, little has changed, with all of them costing about R100 per month. “Although there is a minimal difference in cost between the bundle accounts, strong competition at this level still exists between the banks. After Capitec’s account, Standard Bank’s Elite Plus account remains the cheapest in this category, as was the case last year,” Joubert said.