Amini revolution seems to be taking place as customers leave the rarified air of banking halls to bank in a supermarket.
Retailer banking is an idea that is catching on with an increasing number of customers, who are weary of high bank charges. Apart from the cost savings, there is also the revolutionary idea of a bank keeping retail hours. So customers can do their banking whenever a Pick ‘n Pay is open, even on a Sunday.
Kevin Palmer, CEO of Pick ‘n Pay Go Banking, said everyone is attracted to his brand: blacks and whites, men and women, and the young and the old. ‘We tend to attract younger-thinking people. You can get people in their 20s who think like old people and old people who think like young people.”
Palmer said Go Banking appeals to a certain kind of a person, not necessarily a low-income earner, but someone who understands how to get value for money. ‘We’ve got customers who have millions of rands. These could easily be private-bank clients,” he said, before adding, ‘We appeal to savvy people.”
Palmer said that because of the low bank charges Go Banking offers, it has been classed with the lower end of the market offerings such as the Mzansi product. In reality, the big four are the bank’s main competitors as they have clients on their books who are savvy and would want to pay lower bank fees. FNB, for instance, offers a competitive smart account. Absa, Nedbank and Standard Bank offer an equally competitive entry-level cheque account.
Nonetheless, Palmer believes Go Banking offers the most competitive product on the market. It was the first bank to offer a credit card with no annual card fees — before Virgin Money launched. Go Banking is backed by Nedbank, so customers can feel secure about having one of the big four banks backing their deposits. Go Banking also uses Nedbank’s back-end systems.
Palmer said although Nedbank’s current account is one of the most competitive of the big four, Go Banking is even cheaper. An average holder of a current account with Nedbank would be charged about R136 a month, while a Go Banker would be charged about R67. This is because Go Banking did not have to roll out a branch network as customers are able to transact at any Pick ‘n Pay store, where the till operators double up as bank tellers.
Although some analysts have said the bank has had difficulty selling the concept of a retailer as a bank, Palmer insists his brand is becoming more popular by the day. He would not be drawn into specifics, but said the volumes are significant. ‘Annual transactions have been growing in excess of 20%.”
The costs
Go Banking recently announced that it was reducing its banking fees. If clients do their banking at a Pick ‘n Pay till point, transactions such as cheque deposits, balance enquiries and mini-statement requests are free. Cash withdrawals, debit-card purchases and account payments are charged at R2 per transaction, while debit and stop orders will cost R4 per transaction. If clients maintain a balance of R5 000 or more in their account, they are not charged the minimum monthly service fee of R12 and don’t pay fees for many other transactions. Interest rates start at 2%, but you have to have R15 000 to start getting a decent interest rate of 5%. On the plus side, Go Banking’s interest rate on credit card debit is 16%, which is highly competitive and second only to Virgin Money’s 15,75%.