Innovation in banking is driving up transaction activity, according to the BankservAfrica Economic Transaction Index (BETI) for January 2020.

“Rapid transformations in banking in South Africa are benefitting customers who are at the receiving end of improved experience and lower fees,” explains Shergeran Naidoo, head of stakeholder engagements at BankservAfrica. “This is evident in the current data that shows a pick-up in transaction activity.”

The BETI in January reached 123.4 and grew by 3,7% in real, annual terms. Growth from the last quarter was 2,6% after a 2,3% quarterly growth in December. The monthly change, however, was 0,4% in real terms.

“At first glance, the data does not sync with the current economic reality,” says Mike Schüssler, chief economist at “On an annual basis, it could also reflect the low base of the first quarter in 2019 when the BETI reached a two-year low.”

However, on closer inspection, it is telling of the interbank activity that has created some disruption in the world of transactions.

“The latest BETI reflects the new interbank behavioural changes from the fast-changing world of banking, which also extends into immediate payments,” says Naidoo.

South African consumers are choosing to take the Real-time Clearing (RTC) payments route. This service allows a payment to be reflected immediately in the recipient’s bank account.

“The growth for this was 36,3% in nominal terms in value and 61,3% for the number of transactions. In the two years since January 2018, the number of RTC transactions has grown from 1,9-billion to 4,8-billion. This represents a 151% increase,” says Naidoo.

“Without RTC, economic transactions growth would have only been 2,3% for the month of January 2020 compared to January 2019. This is probably a better reflection of the present economic growth,” says Schüssler.

Banks have also made it easier for customers to open first and second bank accounts. It has also become easier for customers to open accounts at two different banks. At the same time, bank fees are lower and the rewards for owning and maintaining these are higher.

More previously unbanked individuals are entering the banking market and making use of bank services both via card and mobile apps.

“As more bank customers open an account with another institution to get rewarded for doing so, and as transaction fees decrease, the transfer of money from an established account to a new account is occurring more frequently. In effect the same money is counted twice, as the money is used for an economic transaction and again when it is transferred between two different bank accounts for the same customer,” explains Schüssler.

As such, this has created incongruencies in the current BETI data for reflecting the present strength of the South African economy.

Another factor is that most banks are encouraging transactions via the banking apps that they have and many payments are moving away from point-of-sale systems to transactions between sellers and buyers via direct EFTs.

Digital transactions (excluding salary and social grant payments) have grown 9% in volume terms but only 5,5% in value terms. This indicates that electronic transfers from banking clients are being used for much smaller transactions.

BETI data reflects the growing use of banking via mobile apps.

“We are in a new and fast-growing world of transactions that are easier, cheaper and rewards customers with discounts on other everyday products from groceries to movies. The control, convenience and safety are now the driving forces behind many a transaction,” says Schüssler.

As South Africans look forward to President Cyril Ramaphosa’s State of the Nation Address tonight, the latest BETI data provides useful insights on the changing consumer banking behaviour that has allowed for greater participation in the economy and financial inclusion.

“The new ways that consumers are engaging with banks are signs of a progressive economy. But to take this further, the infrastructure conversation needs to include spectrum allocation. This will reduce data costs and enable even higher economic activity,” ends Naidoo.