Challenger to South Africa’s Big Four Banks Boasts Customer Haul

Challenger to South Africa’s Big Four Banks Boasts Customer Haul

Capitec Bank Holdings Ltd., long one of the few challengers to contest the dominance of South Africa’s Big Four lenders, isn’t letting up.

With the pandemic forcing more transactions online, Stellenbosch-based Capitec notched an annual increase of over 14% in its retail customer base to approach 17 million by the end of August, barely slowing from the pace it maintained before the coronavirus outbreak. Digital clients accounted for most of the gain.

Challenger to South Africa’s Big Four Banks Boasts Customer Haul

“It’s quite nice if you grow your total client base but your digital client base is up too,” Chief Executive Officer Gerrie Fourie said in an interview on Thursday. “It just shows you how strong the brand is.” 

The dominance of the Big Four -- Standard Bank Group Ltd., Absa Group Ltd., FirstRand Ltd. and Nedbank Group Ltd. -- is fraying in the face of competition from Capitec and other upstarts. 

Started as an unsecured lender in 2001, Capitec has grown to a full-service offering, becoming the country’s fourth-largest bank by market value. It’s spent recent years diversifying its lending activities to reduce risk and establishing a business bank after acquiring the South African unit of Caixa Geral de Depositos SA in 2018 for $232 million.

In South Africa, the number of digitally-active bank clients has increased by a quarter on a combined basis between the second half of 2019 and the first six months of this year, PwC said this month in a report.

“Client acquisition over the last 15–18 months has primarily been through digital channels, contributing to a higher proportion of digitally-active clients as a percentage of the overall client portfolio,” it said.

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Former African Bank head Basani Maluleke is joining Capitec from October and will help the lender expand its range of products to create more main-banked clients.

The bank is also:

  • Expanding its purpose lending segment by bringing partners on board to distribute credit for vehicles, health care, building and education
    • “On average those loans are 2% to 3% lower than your normal loans because there’s a very specific purpose,” Fourie said
  • It expects staff to spend 60% of their time in the office from October after opening its new headquarters last year

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