SA banks charge twice global average

JOHANNESBURG – Active holders of current accounts in South Africa are paying more than double the global average in bank charges, according to Capgemini, which announced the results of a new benchmarking study this week.

The international management consulting and information technology group recently conducted a global study, the World Retail Banking Report 2007, which included South Africa for the first time. It is being presented to senior executives of local banks and the entire financial services industry.The study found that local current-account holders were paying N$1 863 a year in fees, while the global average was N$732.It said South Africa’s active current-account holders paid more for payment services than consumers in almost all other countries paid for all banking services in total.Sim Tshabalala, the chief executive of personal and business banking at Standard Bank, said the group felt uncomfortable debating the issue given that it was engaged in important dialogue with the competition authorities on the matter.”However, we do not agree with the findings and interpretation of the study’s data,” Tshabalala said.”Our data draws us to the conclusion that the average Standard Bank customer is paying significantly less than the N$1 863 a year referred to in the report.”Stephen Asbury, the chief executive of Gemini Consulting, the domestic associate of Capgemini, said local active users of lower service transactor accounts paid only about 15 per cent less than the global average for full-service current account customers.”Very active current-account holders constitute only 8 per cent of all local bank users, yet they pay 28 per cent of all South African bank charges,” Asbury said.”In real terms, the cost of South African banking services decreased slightly in the last year.These were down 2.7 per cent in the transactor category and 2.89 percent for current account holders.”The Jali commission is currently probing South African banks on how they determine the penalty fees they charge consumers.The inquiry is also looking into the question of whether bank charges halt competition in the banking sector.The hearings, which began in April following mounting public and government outcry, came after an independent report identified concerns about the operation of the national payments systems.Absa, South Africa’s biggest bank, dismissed the report as just one of many reports that attempted to compare local bank costs with those of other countries.Keith McIvor, the general manager of Absa group products, said: “The independent Genesis/FinMark report appears to contradict the Capgemini report by concluding that South Africa’s transaction costs are not out of line with other middle income countries and may provide a higher degree of functionality given the level of electronic payments.”Business ReportIt is being presented to senior executives of local banks and the entire financial services industry.The study found that local current-account holders were paying N$1 863 a year in fees, while the global average was N$732.It said South Africa’s active current-account holders paid more for payment services than consumers in almost all other countries paid for all banking services in total.Sim Tshabalala, the chief executive of personal and business banking at Standard Bank, said the group felt uncomfortable debating the issue given that it was engaged in important dialogue with the competition authorities on the matter.”However, we do not agree with the findings and interpretation of the study’s data,” Tshabalala said.”Our data draws us to the conclusion that the average Standard Bank customer is paying significantly less than the N$1 863 a year referred to in the report.”Stephen Asbury, the chief executive of Gemini Consulting, the domestic associate of Capgemini, said local active users of lower service transactor accounts paid only about 15 per cent less than the global average for full-service current account customers.”Very active current-account holders constitute only 8 per cent of all local bank users, yet they pay 28 per cent of all South African bank charges,” Asbury said.”In real terms, the cost of South African banking services decreased slightly in the last year.These were down 2.7 per cent in the transactor category and 2.89 percent for current account holders.”The Jali commission is currently probing South African banks on how they determine the penalty fees they charge consumers.The inquiry is also looking into the question of whether bank charges halt competition in the banking sector.The hearings, which began in April following mounting public and government outcry, came after an independent report identified concerns about the operation of the national payments systems.Absa, South Africa’s biggest bank, dismissed the report as just one of many reports that attempted to compare local bank costs with those of other countries.Keith McIvor, the general manager of Absa group products, said: “The independent Genesis/FinMark report appears to contradict the Capgemini report by concluding that South Africa’s transaction costs are not out of line with other middle income countries and may provide a higher degree of functionality given the level of electronic payments.”Business Report