Capitec’s 2012 strategy is paying off

Capitec’s 2018 integrated report says it now has over 4.5 million primary bank clients, nearly half of its customer base.

Put another way, it has as many primary bank clients today as it had total clients at the start of calendar 2013 (defining them as those “who make regular deposits, mainly salaries”).

In the past 12 months, it said it is adding an average of 31 000 primary banking customers of the roughly 100 000 accounts it opens per month.

Based on bank-disclosed numbers, it added a net 650 000 primary bank clients out of a total 1.3 million customers in the year to end-February.

It contends that it has 27% of the primary banking market in SA (using the employed population as a proxy).

Of the four full-service banks, only Nedbank discloses granular details of its retail client base.

At the end of 2017, it had 2.783 million “main banked” customers, out of a total base of 7.538 million.

Nedbank says it has 12.7% market share, using a recent market survey by Consulta. (Using this methodology, Capitec has 20% share, meaning the other three banks split the remaining 67% of the market).

The growth in primary clients has been pronounced since it began disclosing the measure in 2012.

This disclosure coincided with a specifically-stated strategy in the 2012 integrated report to focus on this segment.

It said “the number of transactions that clients perform on the bank system is dependent on whether these clients use the bank as their primary bank.

“Many clients have bank accounts at more than one bank, but choose one as the primary account into which their salary is deposited and from which all payments are made.

“This preference is also an indication of the bank: which clients trust, get the best value from, and have the best relationship with”.

It stated plainly: “Capitec Bank regards these clients as the most important to acquire.”

This strategy has paid off, and then some.

The bank recently introduced a new definition: quality banking clients. These are “clients who have stable inflows into their account and stable product usage over a consecutive three-month period”.

It has seen an 18% increase in this segment over the past year. As at end-February, Capitec had 2.6 million quality clients. This is comparable to Nedbank’s entire “main banked” customer base.

Primary bank clients (which includes quality clients) perform the most transactions, and therefore generate the most net transaction fee income for the bank.