Banks are slashing their fees and offering extra services for free as the battle for customers intensifies between traditional banks and new, mainly online, entrants.
Some of the digital-only banks that have sprung up over the past few years are enticing new clients with the promise of zero monthly fees, while the big five have resorted to adding sweeteners, including free additional services, as they fight to retain existing customers.
The newcomers include Bank Zero, Tyme Bank, and Discovery Bank. They are banking on the nimble nature of online only offerings to wrest customers away from the traditional big four — Absa, Standard Bank, Nedbank and FNB. Later entrant Capitec is now considered among the big banks as it boasts the biggest customer numbers at more than 22-million active accounts and the third highest market capitalisation among the big five.
Shaakir Salie, a research analyst at Aeon Investment Management, said the fee structure adopted by new banks appeals to price-sensitive consumers, the younger generation and those conducting fewer transactions per month. These banks, he said, had kept capital and operational costs down by entering into partnerships with retailers for cash withdrawals instead of rolling out expensive ATM infrastructure.
“By leveraging retailers’ store networks for withdrawals, emerging banks avoid the substantial capital expenditure required for ATM infrastructure. Given the brand and balance sheet strength of the established incumbents, gaining market share will be challenging,” he said.
Salie said the market share gains of Capitec at the expense of the big four prove that disruption is possible in the banking sector.
“Innovation focused on convenience, superior customer experience, and targeted value propositions will be key for emerging banks to disrupt the status quo,” he said.
Yatin Narsai, CEO of new kid on the block Bank Zero, said unlike traditional banks and other financial institutions that often market a “zero-fee” account but then catch customers with fees for debit orders or EFTs (electronic funds transfers), all those services are free with Bank Zero.
“When we announced the launch of our bank there were no zero-fee accounts offered by the traditional banks. They only started with this after our press announcement. Even creating products with, for example, names like ‘easy zero account’. But traditional banks are not able to continue with this due to underlying cost structures, and have started charging again. This means that customers are often sceptical about us offering real zero-fee accounts. The only way we can show how we differ from them is [over] time — it’s now the fifth year in a row that we have shown our commitment to that,” he said.
Rohit Subramanian, Tyme Bank's chief strategy officer, said their digital footprint was a key component of their competitive advantage in attracting customers.
“Because we’re a digital bank, the money we save by not having branches — coupled with our core banking infrastructure being hosted on the cloud — means that we can offer consumers a lot more at a lot less cost to them. And having just reached the 11-million customer milestone this week it’s clear that South Africans are interested in TymeBank’s proposition of affordable, quality banking,” he said.
We believe this is essential to drive the shift from cash to digital transactions, especially in the financially underserved segments
— Rohit Subramanian of Tyme Bank
Tyme was the only bank to offer PayShap — a digital payment solution that allows users to make and receive instant payments using a registered cellphone number — for free, Subramanian said.
“We believe this is essential to drive the shift from cash to digital transactions, especially in the financially underserved segments.”
Jean van Rooyen, head of pricing at Absa everyday banking, said the group had been on a journey to reduce fees and had cut banking costs by over R1bn since 2021.
The bank offers zero monthly fees for its youth Mega U and Student Silver accounts, and R6.50 a month for Absa Transact, recently found to be the cheapest bank account in South Africa by a Solidarity Research Institute study. Fees for Absa Ultimate are R98 a month and for Absa Ultimate Plus they are R220 a month.
Van Rooyen conceded that the new entrants are aggressive with their heavily discounted day-to-day pricing, but pointed out that it is important to consider the full banking relationship.
“The reality with new banks is that they do not have an established ATM network, branch network and the full range of financial products and services that you will require at your particular life stage. Absa offers all the products and services you will need in one place. We reward our customers for taking a full relationship through our Absa rewards programme," he said.
Mutsa Chironga, managing executive at Nedbank's consumer segment, said to retain and attract clients the bank offers the best value banking. Its group rewards programme, Greenbacks, offers a high level of cashback on card spend.
“Nedbank clients enjoy several other great savings such as up to 30% off flights, up to 10% off devices and up to 50% off movies. All this value helps to attract and retain clients,” he said.
A report comparing bank charges, compiled by trade union Solidarity's research institute found Absa was the cheapest of the traditional banks in the low-income basic needs category in 2025.
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