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‘New’ ubank disappoints on fees

Johannesburg - A relaunched banking offering for entry level banking consumers may disappoint its target market.

Teba banking group's rebranded banking offering, ubank, was launched in Sandton on Tuesday night at a press conference where bank representatives outnumbered journalists.

Teba, which has traditionally serviced South Africa's mineworker population and has a client base of 500 000, is looking to expand beyond its traditional markets.

"We want to stand side by side with other financial institutions," said CEO Mark Williams.

Williams, who was recognised as a Top Young Global Leader by the World Economic Forum (WEF) in 2008, said ubank would be offering savings, investment, insurance, assurance and both short and long-term loan products.

Williams was confident the bank would not fall into the same trap as some of SA’s failed small banks, which became victims of a crisis in the sector in the early 2000s.

He said the bank had been around in various forms since 1975.

"Our shareholder and business model is different, our shareholder is the customer," he said.

He added that the profits generated by the bank would flow into a trust, which would be reinvested at the discretion of the executive committee. The trust is managed by the National Union of Mineworkers and the Chamber of Mines.

"We operate a little like a mutual," he said.

Group chairperson Ayanda Mjekula pointed out that it had received a mandate from 85% of its members to growing the brand. He also said that Teba had been identified by market research as the eighth best recognised banking brand in South Africa.

With the bank looking to position in the low-income market segment, it is assumed that transactional accounts would have been competitively priced.

According to marketing material for its gold package, customers will pay R139 per month plus a once-off SIM connection fee of R50. This includes "certain free transactions".

This is in contrast to Capitec Bank Holdings [JSE:CPI], which has a basic monthly administration fee of R4.50.

When asked by Fin24.com what would differentiate ubank and make it a genuine competitor against other low-end market participants such as Capitec or First National Bank's recently rolled-out EasyPlan offering, Williams failed to identify any clear areas of competitive advantage. "Teba (ubank) has a unique story to tell," he said.

Mohamed Saloojee, managing executive of the ubank’s retail banking operations, said extensive research had gone into its pricing model, and the company was "comfortable" with where it was positioned.

The bank’s chief financial officer, Jo-Ann Pohl, is an experienced player who previously headed up Barclay's Africa finance department for its Pan-African business.

 - Fin24.com 

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