Absa, which has seen its retail banking turnaround only just begin to gain traction, has frozen the monthly fees on its three most popular mid-market accounts. The Flexi, Gold and Platinum Value Bundles are all unchanged in 2017, at R55, R98 and R159 per month, respectively.
The bank has lost somewhere around 1 million clients a year since the peak in 2011. But, it saw an increase for the first time during last year, adding a net 200 000 clients (to 8.8 million). In the first six months of 2016, it added a further 100 000 (net) to take its retail base to 8.9 million. This means there is still a fair amount of churn in its base as the bank disclosed that its “core South Africa Retail franchise added 410k new-to-bank customers in the first half”.
The return to growth has been a hard slog for Craig Bond and his team (he joined the group from Standard Bank in 2013). A decision to freeze fees is likely not going to have the hugest impact on growth in customer numbers, but will certainly have an effect on churn (in other words, existing customers will find less reason to switch).
Absa has – like its full-service rivals – increased the price of out-of-bundle transactions. For example, cash withdrawals or deposits over and above the monthly bundled limit will cost a little more in 2017 than they do now. The cost of external debit orders and card replacements are higher. On the whole, however, the increases are modest (perhaps the most reasonable of the big four full-service banks).
What has soared is the cost of credit. An overdraft facility (with a balance of more than R250) will attract a monthly fee of R68.40, the maximum allowed under the amended National Credit Act (other banks have made the same ‘adjustment’). This used to be R25. Monthly fees for credit cards have also increased (by 8% on Platinum and 13% on Gold).
It must be noted that Absa has deprecated its standalone pay-as-you-transact Gold and Platinum accounts (along with a host of other niche products such as FlexiSelect, Silver, Potentiate, Gold Senior, 24/7, Prosperity, Shared Account and Absa Current Account.). These are no longer on sale (existing customers remain on them).
It has also removed the cashback that value bundle customers could earn. With a credit card, home loan and vehicle finance, this totaled R50 per month on the Platinum Value Bundle (split R25/R20/R5) and R45 on the Gold Value Bundle (R25/R15/R5).
Rebates for threshold cash balances still apply (no longer the case with most of Absa’s rivals). On the Gold Value Bundle, a balance of more than R30 000 means a discount on 50% of your monthly fee. On Platinum, its more than R50 000 (also 50%).