Solidarity Bank Charges Report: Competition in basic accounts rising; middle class accounts stagnate
The Solidarity Research Institute (SRI) today released its fifth bank charges report comparing the bank charges of the five large commercial banks. This year's report indicates, among other things, that competition in the market for basic bank accounts has become far more dynamic. In contrast, the bank charges on accounts marketed to the middle class are stagnating.
According to Paul Joubert, senior researcher at the SRI, Capitec is generally still the cheapest option for most people, even for those in the middle class. With regard to basic accounts, all the banks have stopped marketing the bureaucratically designed, failed Mzansi accounts and have created better alternatives. "This year, most of the limitations that used to apply to basic accounts at Absa and FNB have been lifted. FNB's EasyAccount and Absa's Transact account are now truly competing with Capitec. Competition at the level of basic accounts is positive because it can prevent these cheap accounts from becoming more expensive over time," Joubert says.
Joubert says that in recent years there has also been competition among the accounts marketed specifically to the middle class, although the bank charges at this level are now stagnating at around R100 per month. In this category Nedbank is the cheapest and Standard Bank the most expensive, the difference between the two extremes, however, is less than R20 per month. "Competition among these accounts is no longer mainly being driven by the lowest cost but rather by the additional features such as rewards programmes," Joubert says.
The report further shows that although certain accounts may be cheap at a specific bank, other accounts at the same bank can be very expensive. To establish if it is indeed worthwhile to switch banks, consumers should not compare the banks, but compare accounts. It is therefore important that consumers know exactly which account they currently have and what that account costs.
Joubert added that informed consumers are the best regulators of bank charges. "Bank clients who are dissatisfied with their bank charges shouldn't merely accept it. By continuously considering alternatives, clients keep the banks on their toes."
Click here to view the full report.
Statement issued by Paul Joubert, Senior researcher: Solidarity, September 23 2014
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