Capitec this week published audited financial statements for the year ended February 2019, showing strong growth in headline earnings and customer growth.
The bank said that its client base has grown by 15% over the past year, to 11.4 million clients. On average, it said that 127,000 clients join the bank each month, with more than 500,000 new clients in January and February alone.
While this growth continues to be impressive, Capitec and other traditional banks will face increased competition in 2019, following the launch of Tyme Bank and the upcoming launch of Bank Zero and Discovery Bank.
Speaking to BusinessTech, Capitec CEO Gerrie Fourie said that the conversation surrounding the new entrants at Capitec has been to focus on the same fundamentals that the bank launched with.
“When we started the bank in 2000 we focused on what the client wants and what do we need to deliver for the client?
“We know that our client’s needs are changing the whole time and it is changing quickly. When you start looking at the competition you are not really focusing on the client.”
Fourie said that Capitec has four main fundamentals:
“We continue to focus on these and then measure up to what the opposition is doing,” he said.
Fourie said that new digital only entrants it’s good for the country, however he added that the local market in general still needs and wants to interact with people – especially on more complex financial matters.
“Capitec believes in an omni-channel strategy that consists of a combination of digital banking, a strong branch network with superior service, and the ability to communicate with clients to help them manage their banking better.
“We still have over 6 million clients visiting our branches every month,” he said.
“We believe the real solution is a combination of digital, branch and very personalised communication, informing and adding value to a particular client. People want that personal contact.”
Fourie said that there has been a clear push by opposition banks to focus on digital.
However, citing Capitec’s statistics, he noted that there are 3.1 million clients who are ‘digital’ but still prefer to visit a bank branch.
“The one thing that people miss is that all the new digital entrants are only on smartphones, and the lower-income, rural South African uses a feature phone,” he said.
“If you look at the so-called ‘unbanked’ they are not on a smartphone, and there are a lot of smartphones that don’t have the capability to run banking apps.”
“If you look at Tyme they are only on Android and not on iOS, so one needs to analyse their offer very carefully and what need they are addressing.”
Fourie said that he understands Discovery’s model – which also only offers smartphone banking – because that is the higher income segment they are playing in.
“The moment you go into the lower-income, financially illiterate, client base you will find that people still predominantly use feature phones.”
Fourie said this was reflected by the 4.4 million people who use Capitec’s USSD service, compared to the 2.2 million who are on smartphones.
“When you talk to clients they say that ‘smartphones eat data’ and they cannot afford it,” he said.
“The average Capitec client spends between R20 and R30 on data and they cannot afford contracts.”