African Bank this week joined in the fight for your banking with the launch of what it says is the cheapest account for everyday transactions and savings pockets that offer the best interest rate on any readily-available positive balance.

And in response to increased competition, Standard Bank this week launched a bank account that comes at a cost of R4.95 a month – undercutting Capitec by 5 cents – plus R50 in airtime or 500MB of data a month, if you swipe your card more than four times a month. A further megabyte of data is loaded on the account for every R20 spent.

African Bank’s MyWorld account, which has no monthly fee, is the cheapest transactional account when accounts are measured using the same methodology as union Solidarity uses when it compiles its  Bank Charges Report, George Roussos, the group executive of digital and transactional banking at African Bank, says.

Solidarity compares accounts across banks by adding up the costs on a basket of transactions used by three different kinds of customer. Roussos says in each of the three profiles Solidarity uses to benchmark costs, African Bank’s accounts were the cheapest account. Your banking fees could be even cheaper if you set off any interest earned on the average account.

In the same way that Capitec allows you to open savings pockets attached to your primary account, the MyWorld account lets you open five additional accounts under the main account – but with no monthly account fee on any of the accounts. (Capitec charges a R5 monthly fee on the primary account.)

The MyWorld account offers two types of pockets: a power pocket and a savings pocket. The power pocket is unique in that it gives you full transactional capability. In other words, it’s not merely a place to park savings. The power pocket comes with its own account number, debit card and PIN and earns 5.5% interest on a positive balance.

The savings pocket attracts an interest rate of 6.5% (nominal, annual and compounded monthly), which compares favourably with TymeBank’s offer of 6% for money held for 30 days, 7% after 30 days and 9% after 90 days.

You can choose anyone to be the user of the power pocket and the savings pocket. That person can only access the pocket, and not your primary account. The user can make full use of the bank’s app and online banking platform.

You may, for example, open a power pocket for a dependant parent or your teenage child, depositing funds into that family member’s pocket and monitoring their use of the money. You may also choose to pay the pay-as-you-use transaction fees on such a pocket.

But for a younger child who is learning the concept of savings and isn’t yet old enough to manage his or her pocket money, you may decide to open a savings pocket instead and give the child “member status” only.

A member can only view activity and make deposits into the pocket but cannot withdraw or transfer any funds.

As a primary account holder you can add up to 10 members to any pocket, making it useful if you want to set up a stokvel.

According to research by African Bank, South Africans want to be able to transact and save together with their family members, friends and their community.

Roussos says the bank has attempted to design a product that addresses the challenges consumers face when sending money to contacts. Moving money from the primary account to pockets is free as are electronic fund transfers.

Basani Maluleke, the chief executive of African Bank, says staff who have tested the account found it easy to send money to family members. “We’ve seen accounts [used] for kids and aging parents, who have never had a bank account before.” 

You can open a MyWorld account online or via the app without having to visit a branch. But you will need to visit a branch to generate and receive your debit card.

You can also open a Standard Bank MyMo account using your mobile phone.

Funeka Montjane, the chief executive of personal and business banking at Standard Bank, says the MyMo account is about bringing the mobile branch into customers hands. “The evolution in mobile can be seen in transaction options like cash back at the retail checkout till rather than the ATM, free digital banking rather than using a branch, and the ability to transact using digital wallets, even without a bank account.”

Historically, a bank account represented access to economic citizenship, Montjane says. But today having a simple device enabling digital access to a modern banking platform is a “passport to global connectivity”.

African Bank’s Maluleke says while the bank does not plan to grow its network of around 390 branches, it has opened branches in Sandton, Rosebank and Wall of Africa, while closing branches in areas that are no longer optimally located. This will continue as the bank’s client profile changes in line with its digital focus.

A survey by UBS Evidence Lab earlier this year found the main reason South Africans are switching banks is due to poor service, followed by fraud on their accounts and more attractive interest rates offered by competitors. 

Interest rates offered have come to the fore as a key issue with new banks likely to target current account users at traditional banks which still pay zero interest, the report says.