19 December 2010

Personal Banking - simpler, better faster?

The Standard Bank of South Africa used to have an advertising slogan "simpler, better, faster", until they were inspired and motivated to make banking more involved.

Now along comes Capitec bank, which, if their blurb is to be believed, is out to really make banking simpler, better, faster.

If their publicity documents are to be believed, this will provide the first opportunity for ordinary people to save money since the demise of the building societies in 1987.

Personal Banking | Global One Facility | Capitec Bank:
We believe that simplicity is the ultimate sophistication. That's why we offer the Global One facility – a single solution to daily money management that lets you transact at the lowest fees, earn highly competitive interest on your savings, and get the easiest access to the best-priced credit through a Daily Savings Account.

The way building societies worked was simple. Lots and lots of ordinary people would put their spare cash in a savings account, which paid fairly low interest. And they would lend this money to people at a somewhat higher rate of interest, so they could build houses.

Then the building societies converted into commercial banks, and imposed fees on savings accounts. Thus any money you tried to save would disappear, as the banks would take it in fees.

Now Capitec Bank does not work quite like a building society. It still charges fees, but if the fees are R4.50 a month, and they give you 6% interest on your savings, then if you have R100 in your account, your savings will still grow by 1,5% a month.

Perhaps if more "fincancial services providers" had thought like this, there wouldn't have been the sub-prime lending crisis that led to the current recession.

One thing I have against Capitec Bank, though. Like other financial services providers, it likes to think of itself as a financial products provider, and likes to call its services "products". I'm not sure what it produces, but such evidence of woolly thinking makes me uneasy. The question of which word to use might not be the only thing they are confused about.

I'm not yet a customer of Capitec Bank, but I'm thinking about it.

1 comment:

James Higham said...

Money in the shoebox is best of all, Steve.


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