Focus on fintech helps lure millions more clients
● Capitec plans to strengthen its already dominant position in digital banking, investing heavily in tech-savvy staff, products and services.
In an interview following the release of results for the year ended February 28, CEO Gerrie Fourie acknowledged that fintech competition was hotting up locally, but said it was also important to look at the “effect of the Facebooks, the Googles and WhatsApp”.
“You mustn’t just focus on the South African competitors, you must focus on the international competitors because … those global players are moving into the financial sector. So you need to make certain you understand your client the best and that you deliver on that client’s needs the best. That is what we are focusing on.”
Fintech refers to technology that automates financial services so customers can transact using computers or smartphones.
Fourie said the main challenge was developing products and services that were “simplistic and really transparent” because if customers understood a product “and they believe in it, they will take it up”.
“This has been the challenge for the past five years and this is going to intensify. Where South Africa in the past was its own island, we are starting to see international players also coming into this space.”
Capitec’s results showed that year on year (y/y) its digital banking customer base (internet, banking app and mobile financial services) rose 17% to 10.1-million.
The bank said it had been on a “strong recruitment drive” for tech skills. “During the past year, 1,367 new employees were hired with 26% of new hires fulfilling critical IT and data business development needs.”
Fourie said half Capitec’s head-office staff of 2,500 were IT, data and data science people and that the bank’s record as a disruptor in the traditional banking sector stood it in good stead to gain market share in this segment. The group has close to 15,000 staff in total across its operations.
“You have to remember, what is Capitec? You can describe Capitec as a fintech or a disruptor because our DNA is to do things differently. It’s the way we look at IT and the way we look at digital. We have 10-million clients on our digital platform and that is massive, and shows you what we have delivered on a digital fintech platform.” Sasfin Securities chief global equities strategist David Shapiro said Capitec’s huge customer base was younger and more tech-savvy than the clients of the established big four banks, positioning it well to take advantage of the expansion of fintech in SA. He said the group’s growth over the past 20 years had always been driven by its tech focus, with its staff historically having stronger tech skills.
Overall, Capitec reported it now had 18.1million customers, up 14% y/y. Fourie said: “If you look at our market share on client numbers … the others are all about 8- to 10million, so we are making inroads.”
Patrice Rassou, chief investment officer at Ashburton, said the 14% rise in client numbers was impressive. Capitec had brought on board about 2.2-million new customers this year, after 1.9-million the year before.
FNB said in March its customer base had risen 3% to 10.69-million, and its eWallet users increased 6% to 5.95-million.
Standard Bank, which has more than 10million customers in SA, said “unique customers logging onto the app have increased by 35% in the last year and customers using digital channels are up 27%, y/y”.
Nedbank said its “retail active customers” remained flat year on year at 6.4-million as at 31 December 2021, while “digitally active customers” increased by 11% to 2.3million customers.
At Absa, customer numbers in SA rose to 9.6-million in 2021, with growth in digitally active customers up 11% to 2.1-million.
Fourie said locally the economy was looking a lot better and Capitec’s clients were generally in a healthier financial position than previously, particularly those with jobs in manufacturing and hospitality.
The million-dollar question, however, was what the effect of rising petrol and food prices would be on consumers.
Fourie said the disruption to supply chains caused by the Russia-Ukraine war and China’s renewed lockdowns would push prices up. In light of this, the bank had retained its provisioning at about R3bn “to make sure we are covered for anything extraordinary”.