Banks freeze and cut account fees as competition ramps up

Mounting competition in the consumer banking space, particularly in entry-level banking, has resulted in banks across the board freeze, or even cut, the monthly fees on these accounts.

Absa is the latest to reduce its monthly fee – its Transact account will cost R4.90 next year, from R5.30 now. In absolute terms, these are not big numbers, but this is a segment of the market that is very price-sensitive and perception plays an outsized role.

Nedbank, after dropping the monthly fees on its Pay-as-youuse account in April, will continue to offer this and its MobiMoney (wallet-type) accounts on this basis next year. Standard Bank has also not increased the monthly fee of its new MyMo account (R4.95) for next year.

From July, FNB cut the monthly fee of its Easy pay-asyou-use account to R4.95 and has recently rebranded its free eWallet eXtra account to Easy

Zero. Perhaps the most significant move this year was the decision by Capitec Bank to reduce the monthly fee of its Global One account by 14% to R5.

These moves follow the disruptive entry of TymeBank, which marked the first time a bank centred its core proposition on a full bank account with zero monthly fees. TymeBank per-transaction fees are also simple to understand and very competitively priced. In fewer than eight months, TymeBank has signed up one million customers.

There is more price elasticity the further you move upmarket into bank accounts targeted at middle-class consumers, and fees tend to cluster around three price points. The first – R60 – is for bundled no-frills banking, with so-called gold accounts hovering around the R110 mark while what used to be called platinum accounts are around the R210 level.

FNB cut the monthly fee of its Easy Smart account by 9% in July, while Nedbank will increase the price of its Ke Yona bundle by 7% from January.

There is not that much room to move on pricing in the middle segment. Absa and Standard Bank will increase the monthly charges of their Gold Value and Elite bank accounts by just 2% next year, while Nedbank’s Savvy Plus account is up 5% to R115.

In the upper-middle segment, banks have the most pricing power. Standard Bank’s Prestige bundle will be 2% pricier from January, while Absa’s Premium Bundle and Nedbank’s Savvy Bundle are up 6% and 5%, respectively. FNB increased the price of its Premier Bundle 5% in July.