I like my bank, by comparison with the rest of the big-four cartel. I like my bank like a mugger who doesn't stab me. By all accounts, it is easily the least expensive among the big four, and it gets a lot right about customer service. Seriously, you should all move to my bank (although I've heard good things about a smaller bank with a limited set of services but great value).
I asked my bank - let's call it Bank A - why it charges 65 cents to send a confirmation e-mail to the recipient of a payment.
I like my bank like a mugger who doesn't stab me.
Ivo Vegter, ITWeb contributor
After all, sending an e-mail costs... hey, anyone know this stuff? I mean, I know what I pay for bread per loaf, and bandwidth per gig. But what do you actually pay per e-mail? An entirely automated, outgoing e-mail, possibly encrypted, which requires no human intervention and is a feature of your business software?
E-mail is a truly trivial application in the 21st century, so I dug up a 10-year-old white paper. It said for an in-house solution sending 10 000 e-mails a week, you'd pay about 10 South African cents per e-mail. By 100 000 e-mails a week, it'd cost one cent, and for higher volumes, even less. Let's assume, generously, that it didn't get any cheaper in the last 10 years.
The price of 65 cents (a profit margin of 6 400%) looks extraordinarily high by this standard. Bank B charges 48 cents. Bank C charges 65 cents too. Bank D couldn't find space in its 58-page fees brochure for this information.
So I asked why. The customer service agents, who happily hang out on Twitter so I can yank their chains in near real-time, said: “This is a service charge associated with the technical administration of secure data.”
Ah, right. The technical administration... what?!
This is 2012. Banks don't employ typing pools anymore. The “technical administration of secure data” today involves no work at all. After a once-off installation of secure mail server software, connected to an Internet pipe on one end and a banking server on the other, it costs nothing measured in units bigger than bytes or microseconds.
In short, it's waffle. There is no such thing as the “technical administration of secure data”.
When I asked how many people the bank employs at their very own Bletchley Park for this evidently quite expensive service, they dodged the question again: “Every e-mail you send needs to be secure, as it contains personal data. Hence we need to have systems that maintain your privacy.”
So, none then.
In a subsequent e-mail, a spokesperson for the bank said the price was intended “to address infrastructure and other costs”.
More lies, then. After all, neither my e-mailed statements nor the paper ones the mailman sticks in the gate next to your mailbox for any passing identity thief to find, attract this “technical administration” fee. Yet they are far more complex, both in the database query that produces it and the infrastructure costs that support it.
The average customer, with average access to the average call centre, is meant to get baffled by this very average waffle.
The CEO of the bank in question was more honest. “Convenience fee. Just copy and paste screen in mail to save 65c,” he told me. At least he's honest: banks do it because they can, and because while it costs them nothing, it's a pain in my neck not to ask them to do it.
However, a similar argument goes for other fees, which aren't so easily dodged. Internal transfers, which can't cost the bank more than a fraction of a cent in computing time, get billed to the customer at R3.30 a pop. Inter-bank transfers - despite being a simple data message - cost far more. On top of that, the banks between them sit on the electronic data representing your money for 48 hours, stealing your interest.
The pricing guide that lists all these fees runs to 148 lines in a spreadsheet, and that's just for one type of account. There are dozens of these little bitty fees for essentially cost-free actions. Some of them can be avoided, and some can be bundled into flat-fee type accounts, but many can't. When multiplied by the number of transactions and number of customers a bank has, they add up to loads of lovely lolly.
Even bottom-of-the-range “Mzansi” accounts siphon off fees this way, which explains why low or irregular income earners aren't too keen on formal banking. It doesn't earn or save them any money, and the costs are just too high relative to their income.
Pravin Gordhan, in his budget speech on Wednesday, 22 February, said: “Fees for many products in the financial sector remain too high. High costs in savings products undermine the national objective of getting our people to save more.”
Indeed. Saving once earned customers money. Now, they pay to deposit money, pay to keep money in the bank, pay when they withdraw it, and pay hefty penalties for the most trivial “offences”. To add insult to injury, the interest they get is hardly enough to cover the price of an e-mail.
In the heavily regulated world of banking, the barriers to entry for new competition are very high. Cartel incumbents have no incentive to shoot themselves in the foot by aggressively going after each other on price. It is much less expensive to compete on brand marketing and customer service. There's no need to throw in cost-free services as extras just to make an account more attractive, because they're too small to quibble about individually.
So banks get away with the drip, drip, drip of surreptitious gouging, and when a customer does make a complaint, they baffle them with plausible-sounding nonsense. And, as my bank demonstrated, even the best of them do so.
Back when I was a young tech reporter, the exact same bank explained the great benefit of information technology: it allows banks to change their business model, from making money the old-fashioned way, on the difference between loan interest and deposit interest, to making money by charging for every single transaction you make.
“Brilliant,” I thought. “That way you can charge both savers and borrowers, and they'll never even notice how they're being swindled.”
No wonder nobody saves anymore.
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