Last week Nedbank announced that Go Banking, its joint venture with Pick n Pay, will be integrated into the bank. The reason is simply a financial one; Go Banking has not been able to grow its current account base of 50 000 customers to a sustainable level.
This is a sad day for me. As a Go Banking customer I have often written about the benefits of Go Banking, the cheapest banking offering on the market.
For those who used the product optimally, banking fees were as low as R12 a month and they provided extremely attractive interest rates for deposits.
I received the full benefits that any Nedbank customer received, including internet banking — but at a fraction of the price. Fortunately for existing customers, the attractive pricing and benefits will remain, but the account is no longer available to new clients. The move shows that although consumers complain about high banking fees, the fees they pay are a result of apathy.
Clive van Horen, managing directory of Nedbank Retail Banking Services, says that although price may be a source of dissatisfaction, it has shown that it is not a reason for people to move banks. “Switching activity is very low for current accounts. They feel it is too much trouble — even if it will save them a lot of money, ” says Van Horen. Perhaps we get the bank fees we deserve.
Paul Beadle, MD of money site www.justmoney.co.za, says Go Banking is one of the most popular bank accounts for users of the website. In fact, if you calculate the cheapest banking product on any of the comparison calculators offered by financial sites such as www.justmoney.co.za or www.thinkmoney.co.za, Go Banking consistently comes up as the cheapest offering.
But these sites were preaching to the converted. People who use these sites are actively searching for cost- effective banking.
Beadle says the demise of Go Banking is very sad as South Africans have largely ignored a bank that could have saved them a lot of money in bank charges. Go Banking was ahead of its time and perhaps South Africans are not ready for the concept of banking in a supermarket.
“Give it a couple of years — and a change of attitude among consumers — and I predict many more of us will be doing our banking Go Banking-style,” says Beadle.
Van Horen agrees that, unlike the United Kingdom and Australia, where the model has been very successful, South Africa may not be ready for real retail banking. UK food retailer Tesco, for example, makes a huge amount of money from its banking products. Yet in the seven years that Go Banking has been operating, it has never made a profit.
Credit should go to both Pick n Pay and Nedbank for persevering for so long, although Beadle argues that perhaps more marketing might have saved the brand.
The legacy Go Banking will leave is that, while not successful, it did force other banks to create more competitive products. Nedbank is also developing the facility to allow all Nedbank clients to benefit from the free cash withdrawal and cash deposits available at Pick n Pay till points, previously exclusive to Go Banking customers.
Benefit for FNB clients
FNB launched its low-cost bank account for R66 a month several months ago. Although it has not commented on how many customers switched to this option, James Fowle, pricing executive at FNB, says that in the past year about two-thirds of new customers opening cheque accounts at FNB have chosen the Unlimited Option (which gives unlimited banking transactions for R66 a month) or its predecessor, the electronic pricing option, which capped electronic fees at R75 a month.
He says hundreds of thousands of FNB customers are benefitting from lower fees on these electronic fee options, which pass FNB’s cost savings on to their customers (when customers use electronic channels instead of manual ones) in the form of lower prices and unlimited trans-actions.