Hunt­ing for the cheap­est op­tion

A chal­leng­ing task

Finweek English Edition - - Cover Cover -

SO WHICH IS AC­TU­ALLY the cheap­est bank­ing op­tion for our fic­tional fam­ily? It’s un­likely that many of us would spend 40 hours com­par­ing fees, as our in­ves­ti­ga­tors did. Banks ar­gue that the low level of clients switch­ing ser­vice providers shows they aren’t as price-sen­si­tive as you might think. You could also sug­gest that com­par­isons are too com­pli­cated and most of us sim­ply don’t have the time or the abil­ity to ac­cu­rately crunch the num­bers.

We re­quested well-known in­de­pen­dent com­par­i­son web­site ThinkMoney (www.thinkmoney. co.za) to use our cri­te­ria and tell us which bank ac­count would be cheap­est. The find­ings gen­er­ated by ThinkMoney and Hor­wath show sim­i­lar out­comes, but the num­bers dif­fer.

While the fun­da­men­tal re­search took char­tered ac­coun­tants 40 hours, the In­ter­net was much quicker. But us­ing the In­ter­net also re­quires a level of so­phis­ti­ca­tion. In­ter­net us­age in South Africa is also re­stricted to about 5m peo­ple, cre­at­ing a sig­nif­i­cant bar­rier to in­for­ma­tion ac­cess.

Any web-based pro­gram will de­liver an­swers based on the in­for­ma­tion put into it. That im­plies a level of knowl­edge is re­quired to make ap­pro­pri­ate as­sump­tions and de­ci­sions in an ef­fort to mine com­pet­i­tive in­for­ma­tion. In­evitably, the com­plex­ity of fee struc­tures means there are quirks that will af­fect the ac­cu­racy of the fi­nal re­sult.

More than 90% of us bank with SA’s Big Four. Be­sides In­vestec, the big­gest bank­ing groups run the coun­try’s private banks. While In­vestec would be the cheap­est op­tion based on the ThinkMoney as­sess­ment of our cri­te­ria, our fam­ily doesn’t earn enough to be in­vited to join – so scratch that op­tion.

For in­ter­est’s sake, our fam­ily would have paid R4 200 – or R350/month – to run all of its bank­ing through In­vestec.

Client op­tions nar­rowed still fur­ther last week af­ter Ned­bank an­nounced it would be ter­mi­nat­ing its Go Bank­ing of­fer­ing, its joint ven­ture with Pick n Pay. Go Bank­ing was a Ned­bank of­fer­ing with dif­fer­ent brand­ing and pric­ing struc­tures. How­ever, it failed to at­tract suf­fi­cient con­sumer sup­port and was shut down. Go Bank­ing it­self had ab­sorbed most of 20twenty’s clients. 20twenty was an in­no­va­tive, but ul­ti­mately failed, on­line of­fer­ing that first op­er­ated un­der the Saam­bou li­cence and later un­der Stan­dard Char­tered.

Paul Beadle, MD of an­other com­par­i­son web­site – www.just­money.co.za – says the clo­sure of Go Bank­ing was a “missed op­por­tu­nity” for SA’s bank­ing clients. “South Africans have strug­gled with the con­cept of su­per­mar­ket bank­ing. Go Bank­ing of­fered lower charges via in­no­va­tions, such as point of sale cash with­drawals. It could have pro­vided cheaper bank­ing for many con­sumers, so it’s a missed op­por­tu­nity – par­tic­u­larly as we of­ten com­plain that bank charges are too high,” says Beadle.

While Hor­wath Foren­sics car­ried out the fun­da­men­tal re­search into bank charges at SA’s Big Four banks, we asked ThinkMoney to in­put our cri­te­ria on its sys­tem.

Ned­bank, Capitec and In­vestec emerged as of­fer­ing the best­priced of­fer­ings to our fic­tional fam­ily. How­ever, there was lit­tle cor­re­la­tion be­tween the fig­ures de­liv­ered by the In­ter­net-based sys­tem and what the slog of mak­ing branch vis­its and study­ing

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