A banking price war is under way and is doing more to drive down bank fees than any government regulation could ever hope to achieve. Recently Standard Bank slashed its banking fees which, it claims, makes its range of transactional accounts amongst the cheapest in the market.

Earlier this year Standard Bank, Absa and Nedbank all launched low cost entry level banking products  allowing a customer to bank for as little as R30 per month, in direct competition to FNB’s EasyPlan.

This latest move by Standard Bank means that across all four major banks, a customer will pay less than R100 for a full transactional account that includes ATM withdrawals and deposits, electronic transfers, debit orders and card purchases.

The start of the pricing war goes back to 2009 when FNB restructured their banking products, significantly reducing their banking fees and providing the most cost effective bank accounts. This was confirmed by a banking survey in 2010 conducted by FinWeek as well as research by trade union Solidarity which showed that Absa and Standard Bank were the most expensive accounts. At the time FNB CEO Michael Jordaan suggested, based on a rough estimate, that the 75% of South Africans who did not bank with FNB could save around R3bn annual in bank fees by switching to FNB.

FNB has been very aggressive in its marketing and has significantly increased its market share signing up 1.2 million new accounts last year. This has clearly brought pressure on the other banks resulting in the latest move by Standard Bank. In response to the news on the fee reduction one Standard Bank customer tweeted “I was just about to switch from Standard Bank because of their fees”.

Standard Bank has revised its six personal current accounts to four new accounts. Standard Bank’s new Achiever Electronic account will cost R69 a month, which translates into a 27% saving for customers who deal with the bank electronically. This would be a direct competitor to FNB’s Smart unlimited option of R79 per month; however Standard Bank limits the number of ATM withdrawals to five per month.

The new Elite package has been reduced from R179 a month to R99, a 45% price reduction. Standard Bank describes the account as “the best value gold account in South Africa”, however it is the word “value” that will have the banks fighting it out. FNB’s unlimited gold account is slightly cheaper at R92 per month, but both banks will argue that based on their customers banking profile their particular product is better.

Trying to compare banking products is virtually impossible as the banks all price differently according to their customer behaviour. Standard Bank has tried to provide some independent measure by referring back to the FinWeek and Solidarity surveys. Based on the bundled options Standard Bank is now the cheapest bank and on a pay-as-you transact basis it is slightly more expensive than FNB in the FinWeek survey but is the cheapest when using the Solidarity survey. Absa remains across all survey’s and comparisons the most expensive bank. Hopefully Absa customers can expect a price revision announcement soon, otherwise they may be tempted to switch to one of the blues.

This article by Maya Fisher-French was first published in City Press