Ease of switching ramps up competition
THREE years ago, only 9% of South Africans who had considered switching banks actually did so. But now people are showing a greater willingness to go through what was once a tedious and hassle-laden exercise.
This year’s Bank of the Year survey showed that 15% of respondents switched their primary banks in the past year.
Another 10% said they were planning to switch soon, and 12% were undecided.
The figures showed that Capitec and FNB gained most of these customers, largely from Absa and Standard Bank.
Of the customers who switched banks in the past year, 41% moved to Capitec and 31% to FNB.
Of those who have not moved banks, the largest group was at FNB. So why do people switch bank accounts? The most common reason, according to customers, was lower charges (35%), followed by lower interest rates on their debt.
Other reasons cited include bad service, high fees, better rewards, being offered too many products, or being refused a loan.
Not falling into the trap of offering too many services is one of the reasons why Capitec is gaining ground on its rivals, according to its corporate affairs executive, Carl Fischer.
“We grew from the low-income end of the market, but now with our greater presence in the major urban areas we have middle-income, higher-income and middle-aged people joining us,” he said.
The demographic profile of customers who responded to the survey underscores this point.
It showed that very little differentiated the customers of Capitec from those of other banks in respect of income, education and — though it had more customers in the Western Cape — location.
More people are switching banks because it is easier than ever to do.
“The perception was that it was complex, but most banks have stepped in to say they’ll assist customers,” said Fischer.
“The reality is that it’s not so cumbersome, and the stop and debit orders are the only hurdle.”
Now, however, many banks change debit orders for their customers.
Though critics believe that banks levy inordinately high fees, more than half of the respondents in the Bank of the Year survey said they believed they were getting value for money.
“Of the 43% who don’t believe they are, only 8% would switch banks because of charges alone,” said the researchers.
“It looks like even those customers who are dissatisfied with bank charges are resigned to paying them.”
Most respondents thought ATM charges for transactions were fair, with 29% believing they were cheap.
A further 40% thought they were reasonable, and 23% thought they were excessive.