With pressure mounting on banks to make their products more comparable, a website that capitalises on the Competition Commission’s recommendations has been launched.
The site, www.thinkmoney.co.za, reviews banking products and calculates comparative pricing based on the individual’s banking behaviour.
Once the browser has created his or her own banking profile, based on his or her average monthly banking behaviour, the site lists, in order of costs, the most affordable banking product that meets those needs. When I ran my own profile, Go Banking came out as the cheapest by at least R500 a year in fees.
The site offers comparisons on all banking products, including cheque and savings accounts, credit cards and home loans.
A useful feature is the independent reviews. It is one thing to sign up with the cheapest bank offering, but what is the service like, is it value for money? When logging on to the site browsers are invited to review their own banking products in return for easybucks, which is the site’s loyalty reward programme.
”We thought it would be difficult to get people to do reviews, but it seems people love giving them and we have had requests for other reviews like investment products,” says Mike Kann, co-founder of Thinkmoney.
He says the majority of the reviews are not just customers using the opportunity to have a go at their bank, but also positive and constructive feedback on banking products. ”We did not want to become another HelloPeter, which focuses on negative feedback; we wanted to have positive feedback too.”
Kann says in the United Kingdom most decisions are based purely on price. But in South Africa service is seen as a differentiating factor and an important factor in people’s decision processes. It can be a useful tool for a customer-focused bank, which can watch the reviews to highlight issues it might have with a product and give it an idea of what features customers enjoy.
For example, in the reviews of Virgin Money credit card there were a lot of positive comments on the fact that there were no annual fees. However, only one customer mentioned the 7% interest earned on positive balances. Virgin Money could use this to decide if this is because it is not an important feature to customers or if it needs to do some more advertising on its interest rates.
Some banks might not be pleasantly surprised. Nedbank has received poor reviews on its current account and Standard Bank is not featuring well. But it is early days still and Kann says that each product will have to have 50 reviews to be accurate statistically.
He says the banks have been able to test the site and, other than RMB, which picked up a small error, there have been no complaints.
The idea came to Kann while he was working in the UK and is based on four websites: moneyÂÂsupermarket.com and fool.co.uk, both of which provide banking product information, Tripadvisor.com, a travel site that collates hotel reviews, and ipoints.co.uk, a rewards programme.
It was while working for Advertising.com — which bulk sells online banner advertising space in the UK — that Kann got insight into the most profitable online businesses, namely moneysupermarket.com, which is about to list for £1-billion, and ipoint.co.uk.
Revenue is generated through banner advertising and lead generation as browsers can apply for banking products through the site.
Kann says this is where the real money is. For example, he says, financial services company Capital One sells the bulk of its credit cards through moneysupermarket.com.
Within just more than a week since inception thinkmoney.co.za had experienced 8 000 hits, with one in 10 people applying for a product online. Twenty percent of browsers registered their profiles for the banking calculator.
Kann says the business plan was to have 500 unique users a day and the site has achieved this already.
He says the company is in talks with major banks to sponsor the site. Although the integrity of the information and calculator will remain, the banks will be able to brand their products.
Ideally, Kann says, the site would like to tie up with those products that consistently come up as the best value for money and with the best overall ratings.
Kann, who has worked for Bain&Co and Capital One, has a strong analytical and banking background and yet he says he finds bank pricing far too complicated. It took four months to collect the information and get the calculator to work properly.
He says Nedbank was the hardest bank to incorporate into the calculator because of its complex pricing. An example is a withdrawal fee from a Nedbank branch: ”R1,10 per R100 or part thereof with a minimum of R17 plus service fees, where service fees are R4 for the first R100 or part thereof plus R1,20 for each subsequent R100, R23 being the maximum.”
Virgin Money, Barclaycard and Investec were the easiest to integrate — Virgin because of its five-fee policy and Barclaycard and Investec because they include all transactions in their monthly fee.
Although bundled options appear to make pricing easier, most banks exclude certain transactions or limit the number of transactions that are included, which just increases complexity, he says.
The acid test should be whether a customer has some idea of what a transaction is going to cost before transacting, Kann says.