South Africa’s student banking landscape has changed considerably over the last few years, with students appearing to shun the so-called old guard in favour of more simple, innovative solutions.
Remarkably, Capitec – the only mainstream bank that does not offer specialised student banking solutions – is fast gaining market share.
Data from youth marketing and graduate specialists Student Village, shows Capitec banks 25% of the student market. It is second only to Standard Bank, with which 27% of students have cheque accounts.
The data is based on the results of its annual Student Spend and Res Room surveys. According to Marc Kornberger, head of student spend research at Student Village, about 300-3 000 students are polled at around 40 campuses across all nine provinces each year.
The company provides detailed research reports regarding the recognition and perception of brands from banks to consumer goods, electronics, clothing and beauty products to the domestic advertising industry.
In gathering data on student banking, it asked students to list all the banks at which they held accounts rather than their primary bank. The data shows that some students have accounts at more than one bank and so the percentage totals do not necessarily align to 100%, it said.
Still, the data shows that relative newcomer Capitec, which featured in the report for the first time in 2012, is steadily growing in the student market.
* Sample sizes – 2012: 1220, 2013: 681, 2014:3646, 2015:3030, 2016:500
Source: Student Village
“Capitec’s popularity is directly tied to their advertising. Students feel that they are very transparent and clear about their fee structure,” said Kornberger.
Charl Nel, head of communications at Capitec, attributes the bank’s success to its “simple, accessible and value-for-money” offering.
“We do not differentiate between clients and do not classify clients as students or pensioners. We, however, do have a good indication of our market share in specific geographic areas where students tend to be. We believe our no frills pay-as-you-go transaction banking option competes well with other student offerings from the traditional banks,” he said.
In a separate survey of 2 328 banking clients, consumer research group Nielsen found that 29% of respondents listed Capitec as their primary bank. Only 18% of respondents referred to FNB as their primary bank, with 17% saying the same for Absa, 15% for Standard Bank and 10% for Nedbank.
Student Village’s research found that students typically have distant relationships with banks. Some bank with particular institutions either because their parents opened the account for them or their parents bank with the same institution, while others look for special student rates.
“In relation to previous years, we’re starting to see a greater degree of differentiation in terms of what banks have to offer, as well as their image and persona. This, in turn, begins to create and give rise to the development of a more emotional relationship with banks moving ahead. Two banking institutions, who continue to fuel and generate excitement are Capitec and FNB,” it said.
Kornberger added that banks with a strong presence on campus, such as Standard Bank, also garner student interest. Student Village is currently running orientation week promotions for Standard Bank.
The report also showed that 65% of students have some form of debt, with 26% reporting either credit card debt or retail card debt and 9% having both.
The students surveyed held credit cards in higher regard than retail cards as they “opened up a greater window of opportunity and had an element of status to it”.
Some 21% of students admitted to owning a credit card, of which 29% held one with Absa, 27% with Standard Bank, 23% with FNB, 19% with Capitec and 17% with Nedbank.
Access to credit at some banks is typically linked to proof of employment. However, some students appear to access credit through shared accounts and are not the main cardholder.
Worryingly, around 40% of students with credit cards were unsure of the interest charged or the terms and conditions of use.
The vast majority of students surveyed said they want to learn how to save, budget and invest.
According to Student Village, the average student spent R32 424 per annum in 2015 compared with the R25 208 spent by the average South African. Food, alcohol, groceries, petrol and airtime were among students’ most frequently referenced expenses.
Around 86% of students received their income from family members, with others benefiting from bursaries or earning money through work and their own businesses.
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