First National Bank is taking the fight for entry-level banking consumers to Capitec, with the launch of its new zero-monthly-fee transactional bank account aimed at the unbanked and underbanked.
eWallet eXtra, due by June, is a combination of FNB’s existing eWallet remittance service and pay-as-you-use transactional accounts. It is set to be the only transactional bank account that carries no monthly fee, with consumers expected to pay per transaction.
At R4.50/month, Old Mutual’s Money Account is the cheapest bank account in the country, followed by Capitec’s R5.80 Global One Account. Capitec is widely considered the leader in the entry-level bank account market and was expected to grow its active client base, which includes primary and non-primary account holders, to over 10m in March.
Per FNB’s estimates, the size of the unbanked and underbanked market, which it aims to serve, stands at over 11m. A 2016 Finscope study on financial inclusion found that 4.3m adults are entirely excluded from the financial system, with only 58% of adults (excluding social grants cardholders) classified as banked.
Although FNB is the first South African bank to offer an account that carries no monthly fee, its chief executive, Jacques Celliers, insists the bank is not a “one-dimensional” price player.
“Price is something that you have to get right. But we’re not a price play; we’re a value bank. We look after relationships and we want to sell you lots of things. Are there alternatives that have different angles? Absolutely. Maybe someone beats us here and someone beats us there. But we’ve got a great space in the country, our brand is doing well, our customer base is happy… It’s about finding the right balance,” he said when Moneyweb asked if he saw the new offering as a potential “Capitec killer”.
Celliers said the bank was not looking to sell credit to eWallet eXtra account holders, whose monthly income could fall between R0 and R7 000, and will rather cross-sell value-added products such as airtime and insurance.
‘Massive business case’
“Business cases for transactional banking work very well if you can on-sell some products to the customer. The problem with the pure wallet is that we haven’t been able to do much with that relationship because the receiver of the wallet doesn’t really have a customer relationship with us. If we can swing that eWallet relationship into a little banking relationship and on-sell, there is a massive business case.”
Pieter Woodhatch, chief executive of FNB Easy, under which the eWallet, pay-as-you-use and basic bundle accounts fall, said the bank has about five million active eWallet users a month, of which 1.9m don’t have an FNB account.
The bank also intends to grow its client base through the eWallet eXtra account and work toward migrating account holders across its transactional bank account continuum as their needs change. Woodhatch said FNB migrates around 20 000 bundle account holders up its chain of accounts per month.
The new account is set to be entirely mobile and paperless in nature, which will keep the bank’s client acquisition costs low. Accounts are expected to be opened in under three minutes based only on the full name and ID number of potential accountholders, which will be verified using the bank’s link to the department of home affairs’ database. The spend limits of R3 000/day and R24 000/month ensure the bank meets Financial Intelligence Centre Act (Fica) and Know Your Customer (KYC) requirements relevant to the market, added Gugu Zikhali, head of FNB’s mass market segment.
“We don’t mind if hundreds of thousands of people open accounts if it can be done in a platform like this, and then see who activates it or not. The efficiency in the design is the monster celebration because it allows us to scale with no origination costs. At the top end of the market, it takes us a hell of a lot of money and investment to originate a client and get someone to come across from another bank,” Celliers said.
He would not disclose how much the bank has spent on developing the new offering, saying that it forms part of a decade of investment into wallet-based activities and capabilities at the bottom-end of the market and that its execution leverages off of FNB’s well-established ecosystem and digital capabilities.
- This article was originally published on Moneyweb and is used here with permission