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Johannesburg - Standard Bank has proposed that bank clients should be divided into five to eight segments, rather than having one basic bank product that caters for all.
When banks' clients get segmented this way, appropriate products and prices can to be worked out. By doing so, clients will be in a position to compare offerings from the various banks.
This latest development follows Standard's rejection of proposals for another single and simple bank product, like the Mzansi account, and also follows a survey which found that SA bank charges are higher than the world average. In a countrywide advertising campaign, the banking group acknowledged that the latter was the case.
Standard says it doesn't support a basic bank product as the client base is too diverse, and this product would not help clients compare prices. Given this, product development is an important area of competition between the big four banks.
Determining the various customer segments would preferably be done via an independent process overseen by the Banking Association of SA.
Consumers who earn between R10 000 and R15 000 a month, write out 10 cheques, have 15 to 20 debit orders and withdraw cash at ATMs less than 10 times a month could be an example of a specific group.
The Competition Commission's technical team, led by Prof. Penelope Hawkins, earlier suggested that a simple, basic bank product must be introduced so as to make cost comparisons easier. Currently, the banks' clients struggle to compare various options meaningfully.
Standard says that if its product development is sacrificed for a core product developed through a centralised process, this would be a contravention of competition rules.
The various segment profiles would help clients choose products, should the Banking Association publish the information in the media.
According to Standard Bank, the Mzansi account is a carefully worked out product that has been motivated by corporate transformation. Such a product has never been available to SA clients and is meant to enable more access to banking services.
"The reasons for this are not relevant to an income segment where the availability of banking services is already very high."
The Jali Commission which is holding the hearings into bank charges, will this week hear the final evidence before a report with recommendations on how to improve competition in the banking sector will be drawn up.
Mike Gresty, a banking analyst with Deutsche Securities, said in a research report that the commission will struggle to have its report ready by the target date of end-July.