Low-cost Mzansi accounts are losing ground to bank-branded products that are cheaper and more appropriate for low-income customers.
This is one of the findings of the 2012 FinScope South Africa survey. It has also found that financial inclusion has increased and 67% of South Africans now have a bank account, up from 63% in 2011. This increases to 72% if other formal financial services, such as insurance, are included.
The news comes on the back of research done by trade union Solidarity, which shows that almost all South Africa's major banks have dropped the fees on their personal banking products.
The FinScope survey has found that people who have greater access to services include 75% of all social-grant recipients who now have bank accounts, up from 60% last year.
Mzansi accounts, first introduced in 2004 to draw more people into the formal financial system and provide services to low-income earners, are steadily losing out to bank-branded products. In 2010 about 15% of South Africans had an Mzansi account, according to Jabulani Khumalo, information and research specialist at FinMark Trust, which conducts the FinScope survey. In 2011 there was a drop to 10% and the figure now hovered at 6%, Khumalo said.
There were a number of reasons for this, he said. Banks have begun to develop their own products to cater for lower-income earners and discourage the use of Mzansi accounts.
The Mzansi account had been a "one-size-fits-all" offering, said Khumalo, and had negative associations as being a "poor man's bank account". Banks have introduced their own products, such as Nedbank's Ke Yona Account, FNB's Easy Account, Standard Bank's AccessAccount and Absa's Flexi Account, which are attracting more customers.
Solidarity's report on bank charges, released last month, shows that increased competition and consumer pressure for reduced charges have resulted in reductions in banking fees.
Solidarity's research considered accounts held at five South African commercial banks – the big four of Absa, FNB, Nedbank and Standard Bank, as well as Capitec – and made comparisons based on a range of user profiles, each using a different combination of monthly transactions.
Capitec remains the cheapest overall. Charges on its Global One Account have fallen to R55.50 a month, a decline of 15.9% from 2011. FNB comes in second with its Smart Account costing R74.53 a month, down by 18.2%.
Solidarity said that the big four banks introduced low-cost transactional accounts to compete with Capitec's offering. These accounts had not been included in its previous survey because they were "subject to various special requirements – some of which still apply – that made direct comparison with other accounts difficult".
The report included them this year and has found that, with its Easy Account, FNB again has the offering that best competes with Capitec's Global One account. It "narrowly" beats Capitec on a number of user profiles, according to the report. However, Solidarity said, when the interest Capitec offered its account holders was included it was cheaper.
"If the minimal amount of R8.15 interest that is earned on a R2 000 balance at Capitec is included, Capitec is the cheapest of the low-cost accounts throughout the comparison," said the report.
Growing financial inclusion combined with falling bank costs are positive developments for beleaguered local consumers. The South African Reserve Bank's latest quarterly bulletin has shown that household debt levels remain high, at 76.3% of debt to disposable income in the second quarter of 2012. The percentage of retail borrowers in good standing, or accounts in arrears not more than two months, has fallen to 53% – the lowest level since records began in 2007.
The FinScope survey shows that South Africans are borrowing money to meet immediate needs and nearly half can no longer afford to save money at the end of the month. The survey has found that 32% of people who borrow money are doing so to buy the basics such as food. In terms of saving for the future, 47% of people who have previously been saving in some form no longer do.
A great deal of work still needed to be done, said Khumalo. "We need to look at how to deepen financial inclusion." This includes improving how people use their accounts; for instance, 42% of customers who have average monthly incomes of R2000 still withdraw all the money paid into their accounts at once.