FNB makes all EFTs free for South African clients earning over R750,000 a year

FNB has significantly changed it pricing structure, aiming to make it simpler for customers to understand and more relevant to modern banking needs. 

This includes a focus on payment and transfer fees, with fee and commission income becoming increasingly important for South African banks as they look to reduce their reliance on lending. 

Fee and commission income is extremely lucrative for banks, with it being significantly less capital-intensive than traditional banking activities, such as lending. 

South Africa’s traditional Big Four of FirstRand (FNB), Standard Bank, Nedbank, and Absa have also had to respond to increasing competition. 

The rapid growth of Capitec, Discovery Bank, and GoTyme Bank has forced some changes in how the Big Four market their products and attract customers. 

As a result, FNB has cut its payment fees and is making an increasing range of transfers free for customers, while fundamentally repositioning its business banking offering. 

These changes come with some performance improvements, such as more real-time payments and enhanced value through eBucks. 

Presenting FNB’s annual pricing and value review to the media, FNB Core Banking, Retail and Business Banking CEO Senzo Nsibande explained that customer activity has driven many of these changes. 

As an increasing share of transactions occurs digitally, traditional banks have had to adjust how they price their offerings, with many neobanks offering zero fees on digital transfers. 

FNB has maintained its historic standard of FNB-to-FNB payments being free, while making EFTs free across several account segments. 

EFTs are now free for all FNB private banking clients, including transfers to other banks, and for FNB Gold Business account holders. This includes RMB clients. 

This is coupled with free real-time payments within bundles for all clients from Easy accounts upwards, regardless of whether the transaction is FNB-to-FNB or interbank. 

FNB has also overhauled its Solopreneur offering, which is designed for private banking clients with a side hustle or who are self-employed. 

These individuals typically manage their business activities through their personal bank accounts, with FNB looking to introduce them to business banking. 

FNB private core banking head of product Mohamed Choonara told Daily Investor that the biggest challenge these individuals face is accepting payments. 

Choonara revealed that FNB’s private banking base has around 600,000 solopreneurs, ranging from doctors and lawyers to informal traders. It estimates the broader market is 1.5 million strong. 

Where they run into challenges is in receiving payments across multiple channels, such as cash, card transactions, and EFTs. Solopreneur aims to solve for that without pushing them to a cumbersome business banking product. 

Business banking and payments

FNB also announced significant changes to its business banking pricing, with increased demand for digital payments driving a shift in product offerings. 

As Choonara explained, many businesses struggle with accepting a range of payments alongside cash, which remains a critical part of South Africa’s economy. 

FNB’s new business banking pricing structure looks more akin to offerings from fintechs, such as Yoco and iKhokha, which have grown rapidly in this space. 

This comes in the form of a change in the bank’s merchant pricing model to implement lower commission rates that are variable depending on payment volumes. 

FNB has also overhauled its Speedpoint pricing, with it allowing customers to buy devices outright or rent them for a monthly fee. 

The bank’s new devices also allow businesses to sell prepaid electricity, data, and airtime. Higher-end devices enable stock management and tracking of business performance. 

Targeting small businesses, these machines aim to allow owners to put their entire business on a terminal device, reducing the need for layers of software or manual stock trading. 

This is in response to increasing competition in a space where FNB has historically been dominant, with Nedbank snapping up iKhokha to enhance its offering. 

Nedbank also poached FNB business banking head Andiswa Bata, who led FNB’s rise over the past seven years. 

Other banking giants, such as Standard Bank, have sought to clean up their business banking book and are now on the front foot. The Big Blue has invested over R1 billion in overhauling its digital business banking offering. 

This is partly driven by the entrance of Capitec into the business banking market, with the emerging lender’s offering proving highly attractive. 

Other entrants into this market, particularly at the lower level, are also steadily eroding the proposition offered by banks, forcing them to make changes.

However, banks have a notable edge over these competitors in that they are able to clear payments more efficiently and can provide a complete service.

As a result, while the offering may be similar to what some fintechs provide, settlement is often significantly quicker, enabling more effective cash flow. 

The revamped offering also looks to enhance FNB’s presence in the fast-growing market of lending to small businesses through its FNB Cash Advance offering. This is a working capital facility linked to trading performance.