Solidarity’s 10th annual bank charges report: Here’s how SA’s big 5 banks compared

Solidarity Research Institute has released its 10th annual report on bank charges in South Africa, showing that Capitec has emerged as the country's leading bank in offering the most cost-effective accounts to low-income users. The report highlights the importance of competition in the free market in driving lower prices for consumers. Monica Mynhardt, a researcher at the Solidarity Research Institute, discussed the key findings of the report in an interview with CNBC Africa. According to Mynhardt, Capitec stood out as the winner in both the low income and middle income categories by maintaining the lowest costs for users. The report evaluates bank charges across three income groups and analyzes various transaction profiles to determine the banks offering the most affordable services. This year's report focused on the top five banks in South Africa, based on transactional volumes, to provide consumers with a comprehensive view of the banking sector's offerings. While traditional banks have historically dominated the market, the emergence of new digital banks has increased competition, potentially leading to more affordable banking options for consumers in the future. Mynhardt noted the significant reduction in bank costs over the past decade, even after adjusting for inflation. She highlighted that all banks, with the exception of Nedbank in the low income category, were able to lower their costs for the lowest income groups. Standard Bank faced challenges in the middle income category, while high middle income users experienced comparable costs across banks. Standard Bank emerged as the most expensive option for consumers. The research did not delve into hidden costs such as non-bank fees, focusing instead on typical monthly transactions to provide a general overview of banking costs. While the report did not calculate the cumulative decrease in costs over the years, Mynhardt emphasized the ongoing efforts by banks to stay competitive while enhancing service offerings. The continued focus on reducing costs in a competitive market highlights the benefits of consumer choice and market forces in driving affordability in the banking sector, ultimately benefiting consumers.