Nedcor, Standard Bank, First National Bank and Absa have all invested heavily in their online banking services during the two years that 20Twenty was left out in the cold following the death of its original parent, Saambou.
The branding, re-branding, expansion of product offerings, beefing up of security procedures and the extensive marketing campaigns have all helped to conquer client fear of using the medium and shown that it is a viable way to do banking.
None of the big four banks release detailed numbers regarding the size of their investments into their online banking ventures, but it is known that the sums have been considerable.
One motivation behind their investments has been cost. If they are able to reduce their employee payrolls, they will be more profitable.
It is all about cost
Salaries take up a considerable amount of a bank`s budget and the efficiency of having large staff numbers is questionable.
It is an accepted fact that many banking functions can be automated. Regular payment of fixed bills such as housing loans occur every month that are often transacted through a stop order and then there are the odd large amounts, such as paying a deposit for a new vehicle that can also be confirmed electronically. Almost nobody needs to use the traditional "check system," or even needs to visit a branch on a regular basis.
20Twenty probably has the only customers who are actually proud of the bank they have their accounts with.
Paul Vecchiatto, journalist, ITWeb
But 20Twenty comes from the opposite side of the fence. It is building its business on the fact that online banking can help it to offer a viable banking system without the incumbent costs of having a large branch staff.
For 20twenty founder and head of Standard Chartered SA retail banking operations Christo Daval, the real benefit is the ability to set a fee irrespective of the number of transactions, unlike the big four`s graduated approach, and the ability to offer real personal service, something the big four have been failing to impress their own clients with.
Branch out
The absence of a branch network for 20Twenty does hamper it somewhat. Its ability to cross-sell products, such as insurance policies and getting to know its clients on a personal basis is almost non-existent. And this is something the big four are more than willing to capitalize on with models such as the "bancassurance" models they are pursuing with varying degrees of success.
For them, the beauty of this model is that it can "lock in" a customer for a very long time especially if he or she has bought an insurance product or financed something at a favourable rate.
Expanding 20Twenty`s product range from its one hybrid current/credit card account will be difficult as so many other products require some sort of personal interaction. This is something the big four are very aware of and they already have with the "bancassurance" models - where the branches pass on sales leads to their insurance representatives - they are pursuing with varying degrees of success.
War of attrition
The big four banks also know 20Twenty intimately. They all had a good look at it when it was up for sale and they all rejected buying it - possibly hoping it would just wither away.
But now it has the backing of one of the world`s largest banks and a very loyal customer base to boot. 20Twenty probably has the only customers who are actually proud of the bank they have their accounts with.
20Twenty`s strength lies in its low fee and telephonic service, while the big four still have scale of size, an extensive branch network and the ability to motivate an aggressive sales force.
So rather than an open price war that will cause the various banks to literally bid for their clients` business, it will be more of a war of attrition where the one will offer a service cheaply, almost below cost, and then try and recoup the fees lost somewhere else.
This means the customer will have to scrutinize his or her bank statements very carefully to see just what for and how much they are being charged.