Periodic report on the prices of common banking services for households in 2021

Today the Banking Supervision Department presented its periodic report on the prices of common banking services for households in 2021 to the Knesset Economics Committee. The report is based on reports from the banking corporations and credit card companies r​
egarding fees charged during 2021.

Supervisor of Banks Mr. Yair Avidan said, “As part of the report to the Committee, I would like to provide an update that a number of basic current account services are currently being brought under supervision, with the aim of enabling the public to consume these basic and essential banking services, both at bank branches and through the various digital means, at a fair price.

“The ‘Basic Track’ service is already supervised, which enables customers to obtain basic services at a low price of up to NIS 10.  We have now decided to bring four additional current account services under supervision: ‘teller-executed transactions’, ‘customer-executed transactions’, ‘expanded track’, and ‘expanded track plus’.  The imposition of supervision on these services means that the existing price level is fixed, and it is intended to ensure that the prices of these services will not increase.  This measure is another element in the Banking Supervision Department’s holistic view that emphasizes putting the customer at the center and transferring power to the customer.  As part of this, I again call on the public to use direct channels and digital means, which are cheaper than making transactions through a teller, and to examine the worthwhileness of the tracks service, which can save costs.

“In addition, now that we are experiencing increases in the cost of living regarding a wide variety of services and products, I call on the banking system to show greater sensitivity, particularly when dealing with consumer issues that are at the heart of the public’s sensitivity such as the prices of banking services, and to adjust the level of fees to the value that the customer derives from the service he receives, for which they are charged.  The Banking system must continue, through a variety of ways, to make sure that it maintains a high level of service particularly for population groups that may find difficulty in using direct means.  In order to help customers engage in informed consumerism, the banking system must continue to simplify its products and services and make them more accessible, while properly enabling customers to compare the nature and prices of the various products and services.”

The following are the main points of the report:

  • In 2021, the downward trend in the ratio of income from fees to total assets of the banking system continued.  This trend began following the Bank Fees reform in 2008, and to date, there has been a cumulative decline of about 47 percent. The decline is partly attributed to the cumulative range of Banking Supervision Activities regarding fees in recent years. The decline in 2021 continued this trend but was also greatly influenced by the COVID-19 crisis, which continued to have an impact on economic activity and on households during the first half of the year.
  •  In 2021, the average cost of managing a current account and of holding a payment card in the account was comprised of:

o   The cost of managing a current account averaged NIS 10.8 per month, a decline of about 4.7 percent relative to the average cost in 2020. This decline was mainly due to a decline of about 17 percent in the number of transactions refused due to insufficient cover (returned checks, standing orders, and authorized debits).

o   In addition, the trend of transitioning to digital transactions continued, which is also contributing to lower fees.  In the past decade, the cost of managing a current account declined from NIS 20.4 to NIS 10.8 per month, a decline of 47 percent.

o   The cost of payment cards averaged NIS 13.8 per month, an increase of about 7.7 percent from 2020.  The increase was mainly due to growth in income from transaction fees and foreign exchange withdrawal fees, due to the economy’s return to some sense of routine relative to the parallel period in the previous year year, when the COVID-19 crisis was at its peak.​

Over all, the average cost of managing a current account and holding a payment card increased by about 1.9 percent relative to the average cost in 2020, to NIS 24.6 per month.  This cost is about 8.6 percent lower than in 2019, prior to the outbreak of the COVID-19 crisis, when the average cost was NIS 26.9 per month.