Hunting for the cheapest option
A challenging task
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