Capitec hungry for more of the SME pie
Capitec, the country’s biggest bank by clients, aiming to lead the underserved emerging business segment, has crafted an affordable, “no-frills” banking service package to attract small and medium enterprises.
Marketing head Francois Viviers said the focus is on addressing the gap in the market where SMES often include customers who have side hustles to supplement their incomes.
“We know that a significant number of our retail banking clients have side hustles, and the traditional banks have been excluding them because they focus on formalised businesses.”
He said there are many SMES looking for simple, transparent and affordable banking.
“They want payments simply through a card machine or online, and most importantly, the ability to receive funding so they can grow. We are designing for that,” he said.
Viviers said SME banking is underserved by traditional banks, and Capitec wants to compete aggressively in the formal SME segment and win market share.
“We believe the opportunity is not just to win a big slice of the pie, but to grow the pie, to grow the market for formal banking for SMES.
“In terms of what percentage share of the market share, there is no hard target. We want to be the leading bank for SMES in SA in a short space of time.”
“If you can pay R3.50 for a debit order on your personal account, or R1 for an electronic payment on your personal account, or swipe your card for free, why should you pay more for business banking?”
He said the “no-frills” bank solution focuses on simplifying banking and extending it to the informal sector.
“There are 1.5-million formal SMES that we know are being banked, of which half pay tax.
“We think there is double that in the informal sector.
“In our research there are people in township areas who provide fresh fruit to the market, who provide transport, who own a couple of hair salons or run shisanyamas that have high turnovers, all of it cash.
“They are not yet included in the formal banking space.”
It said the challenge in the informal sector is preference for cash over digital transactions.
“Especially in a market where people rely on taxis, rent rooms and buy from spaza shops which only receive cash. It is an ecosystem challenge — and not an easy one to solve”.
Capitec has started a project in Thembisa to test how informal businesses can take up a shift from cash to cashless transactions.
“We have partnered with a number of spaza shops and emerging businesses where we provide them with the ability to receive payments via card machines with low fees, as well as the ability to receive payments using Payshap.”
Cash not necessarily king Viviers said cash is expensive to manage and to insure.
“The infrastructure you need for ATMS — with load-shedding, the backup power supply, the security, the rental of the spaces, the cash in transit transport — all these are expensive infrastructure.”
Capitec, established in 2001, today has 20-million customers and 860 branches. It has loans for education, home and vehicles and a funeral cover offering.
It also offers prepaid airtime and data that does not expire, and recently introduced bill payments and a vehicle licence order facility.