Capitec CEO Gerrie Fourie to shareholders – Here’s why we’re winning

Warren Buffett’s Berkshire Hathaway has proved that when you put on a show, shareholders will come – in his case 40,000 of them. That has spurred other listed companies into rediscovering the importance of their annual general meetings. South Africa’s banking success story Capitec is once again in the vanguard. Last year it broke new ground with a live webcast of its AGM, and today upped the ante with CEO Gerrie Fourie using the opportunity to take the wraps off new initiatives and updating co-owners on the progress in areas like the recently launched credit card. One day all companies will be like this. – Alec Hogg

Gerrie Fourie: If I look at the key indicators for the year achieved, our earnings per share grew 18% to R3.8bn. I think if you look at that, last year at the AGM and previously I said that the economy to a certain extent is going to help us because people are looking for value for money on the transactional side, strong growth and then it’s going to be a difficult year on the credit side, but I think overall we’ve grown our credit book and income by about 12%. So overall we’re quite happy, in a very tough environment, to show an 18% earnings per share growth. If we look at our return on equity, 27%, our target is 25%. We said to ourselves, we would like that down to 22% and that’s enabling us to actually reduce our prices on our lending side to attract more quality clients.

We’re going in on the 10th of June, whereby a certain amount of our loans will be granted at a much lower rate that we’re currently growing, granting to make certain that we attract that client base, so we’re quite happy with the return on equity of 27%. If we look at cost to income ratio, 34%, stable for the last three years, if you look at our investments that we’ve done in the last year, R1bn in Capex, we’ve appointed about 120 people on the IT side and IT people are not cheap, they’re expensive, we’ve opened up 78 branches, we redesigned about 110 branches, and we’ve put out about 400 ATMs. So to get your cost to income ratio flat at 34%, I think it’s extremely good performance.

If I look at our transactional income, I’ve said it before and I’ll say it again, that we would like to cover all our operating expenses for 100% by our transactional income, so our credit then is basically for free, 72% of our costs are covered by transactional income, so very nice growth, a growth of about 30% on the transactional side. We’re doing extremely well in that particular area. Then just going back to that, 37% of our income is now coming from our transactional side, so I think overall we had a very good performance. If I look at the economy, yes, interesting times. I put the two words there, ‘unexpected’, and ‘volatility’.

I think if you look at what’s happened locally, I met the DA leader Mmusi Maimane about a year, year and half ago. He said to me that they’re going to take over the four metropoles. I thought to myself, he’s crazy and we all know what’s happened, they’ve taken Western Cape they’ve taken PE, they’ve taken Joburg, they’ve taken Pretoria and that within a year and a half. I was quite often in London and nobody thought Brexit was going to happen, yet it happened and then I think the biggest surprise of all was Trump. Nobody expected Trump to happen and as we woke up that morning, we suddenly realised we have a new President in America, nobody expected that. I think that’s the volatility that we’re living with.

I was recently in France attending the MasterCard board meeting and we spent quite a lot of time on Trump and the effect of Trump on the world economy and the one thing that they said: he will operate legally, but he will operate outside the norm, so not in the norm that we expect. If you look at it, he’s a businessman, he’s a dealmaker, so you can look at deals, and he’s starting to make deals with China and Saudi Arabia and so there will be many deals, but if you look at the White House, the Congress, that’s completely understaffed, it’s not his forte, that’s not what he’s going to focus on. I think that the message that we’re getting across is if you look at America when it sneezes, we get a cold. I think we’re going to see a lot of volatility coming through. The one thing that we’ve learnt in the last year to two years is, we always looked at economical risk, but suddenly there’s a new factor, political risk.

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What you plan today and what’s going to happen tomorrow, you don’t know. I actually said to the asset managers just before Pravin Gordhan was released from his job, I said to them, “I think South Africa is going to be stable, Pravin is safe, the exchange rate is looking positive, the interest rates are looking positive, everything is looking fine” and we all know what happened on that Monday. So, political risk is the new thing that we need to manage and we need to be prepared for political risk. What have we experienced? You can clearly see if you look at those two graphs, retrenchments 2014, 2015 was the high, and then last year, we started quite high and then actually slowly came down and came down to levels between 2015 and 2017 and if you look at the first four or five months of this year, we definitely see a slowdown on retrenchments.

What we have seen, is a lot of voluntary retrenchments. So, instead of offering a retrenchment package, a person is offering a voluntary retrenchment package where he can actually then decide to go. What is quite interesting because we cover the person fully for retrenchment, if he takes a voluntary, he’s not covered, but he’s covered when he is fully retrenched. Debt review, everyone is suddenly given the pressure and I’ll show you slides on the pressure. Everyone is now running to debt review and you can see that graph going up and we’re still seeing that graph continue, especially to your R15,000 to R20,000 income earners, there’s a big increase in debt review. If we look at inflation, if you look that graph you can clearly see what the drought did last year to South Africa.

Our inflation was around 4%, has gone up to 7% and then you can see inflation going 9%, 12% on the food side. If you look at the lower income where maize is the important component, that went up to 18% and you can see the effect of that on people not earning a high income. Currently, the inflation is down to 5.3% and the expectation is that it would be around about there. The biggest driver of that is the food inflation that’s coming down. So, I think on the inflation side, let’s be optimistic, and say that interest rates will probably drop in the next six months, but we believe it’s going to be quite stable, but I think it’s important to understand what inflation has done to our client base. This graph is quite busy, but what we’ve done is just to look at 2.7-million clients that are banking with us, to look at what has happened with the inflows, what has the economy actually done to themselves.

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Now what is interesting, if you look at this slide, you can look at December, you can see definitely December spiking and that’s your bonuses coming in. Then you see the pressure of January and February and that pressure is coming because people are not getting overtime and they’re not getting recurring bonuses that are getting paid out on them, but what you’re seeing is, people that are earning about R20,000, in February 2016, they were earning R18,000. That has dropped to R15,000, so there’s a R3,000 drop on the income levels. If we analyse it, the big drop there is, what is happening in the economy is the fact that people are not earning overtime, they’re not earning those bonuses, companies have pulled back, and companies are paying later.

If you go and look at the credit assessments we’ve seen quite a number of companies that normally would have paid on the 25th, they’re only paying on the 3rd, 4th, 5th, so they’re paying six, seven, eight days later, cash flow on those companies and we see many people that have lost their jobs. If you look at our arrears, the biggest contributing factor, about 70% of our arrears are caused by people that have no inflow into their bank accounts. Just maybe a perspective, 85% of people that have credit with us are actually banking with us. So you can see the pressure on the client. This probably illustrates this better. I’m looking at the private sector and I’m looking at government and what we’re looking at is cash stress.

So, we’re looking at plus minus 500 000 clients a year back and that same 500 000 clients now and we said, “What has happened with themselves?” We take their income and then we can see all their debit orders and loan obligations we can actually see and we measure that and we’re saying people that have more than 40% cash available are people that are on a good standing. You can see in the private sector, that was 84% and it’s dropped to 70% and in government, it was 74% to 70% and you can then see people with cash stress of less than 20% available stay plus minus the same and the biggest contributing factor is people that have actually lost their income, that have no inflows, that’s gone up to 16%. Where it’s taken place, if you look at the private sector, people earning less than R5 000 show the biggest stress.

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We do these two analyses, we’re doing an employer per industry per area to understand where the stresses are and what we’ve done in our credit policies and I will allude to that later on, especially on your smaller companies, your tiny companies which are closing down, we’ve cut back quite a lot. Then in your lower income people, we’ve cut back quite a lot in our credit policies to make certain that we can face the economy that’s coming forward. So, what you’re seeing here is for sure economic stress in the economy. If you’re looking at the banking clients, 8.5-million clients, the nice thing is that figure as it’s standing this morning is at 8.9-million clients, so we will go through 9-million clients in June. I think that’s a nice accomplishment to say in June we’ll have over 9-million clients.

I think that in January and February it’s been shown in the video, 170 000 people joining us in January, 150 000 in February, 150 000 in March, 130 000 in April and May is looking at a 150 000, so we’re still attracting a big portion of clients.

The important figure is actually not how many clients we have, it’s how many banking clients we have. The lower figure, 3.9-million, that figure is standing as this morning at just over 4-million because those are people that are actually depositing their salaries with us because those people’s income that we’re getting out of transactional income is about five times higher than a normal client, so the big focus here is to say, “How many of that 8.5-million clients can we convince to come and bank with us”. So that is a very big driver of our transactional income.

The next graph is a bit of perspective of South Africa. We get that question a lot in saying, “But, Capitec has only been there for the lower income or the poor people” .When we built the bank, when Riaan was still active, we always said we’re building it for all South Africans that are looking for simplistic, transparent banking services, but I think this gives you a bit of a reality. This study was done in 2015 by AMPS and the scary thing there is, there are only 690,000 people that are earning more than R30,000 a month in South Africa. The average salary in South Africa is R16,000 per month, that’s gross. If you’re looking between R10,000 and R30,000, there are 4-million people. You can see there we have an 11% market share.

Our objective there is to increase that market share in the next two to three years to 20% and then on your below R10,000, that’s 14.7-million clients and we have a market share there of about 25%. Currently, that market share is probably closer to 30% if you take the newest figures in consideration. I think the other reality check when Pravin Gordhan gave his budget speech in Parliament; he increased the top tax bracket from 42% to 45% for people earning more than R1.5m a year. There are only 100,000 people in South Africa earning more than R1.5m and they’re contributing 27% of the tax payers, so there are 100,000 that are contributing a hell of a lot in South Africa. That gives you a little bit of a perspective of the South African client.

If we look at our offer, I think it’s a very straight forward, simplified offer. If you can look at it, if you’re doing self-service, it’s costing you R1.50 per transaction, if you look at in-branch, R5 and if you withdraw cash, irrespective of the Rand value, at our ATMs it’s R6 and at a different ATM, it’s R8. Many other competitors that are opposing us with bundle accounts, normally R100 bundle account, but if you look at what we’re seeing, of our 8.5-million clients, 5.5-million of them are actually paying less than R50 a month. So, if you do a simple sum, if you do ten self-service transactions, that’s R15, your monthly fee is R5, you withdraw four, or five times, you add R30 or R40, you’re still far away from bundle account of R100. What this is just showing, people are looking for value for money, and we’re offering a very simplistic pricing structure.

If I look at client service, just to attract those clients, costs a lot of focus and dedication and making certain our people are with us.

If you look at our distribution network, we now have just over 800 branches, it’s 807, we opened Canal Walk as our 800th branch two months ago. We have over 300 branches that are open on a Sunday. About 70% are operating from 08:00 till 18:00, so we are there when the client actually needs us. You can see the new look, a big focus on the new look where we’re upgrading our branches to the new look and feel and then on our ATMs, 4,000 ATMs with a very important relationship with Spark where they have about 2,300 ATMs making certain that we can produce our service in the market. If we look at it, the biggest impact this year is on self-service, I don’t think anyone really knew how strong self-service was in Capitec and I’ll show you some of those figures. There are 5.4-million clients using USSD, there are 1.8-million clients using our app.

That figure now is 2.1-million. I was talking to Vim, our head of IT, this morning we were doing a thousand transactions per second on the app. Now when we came in at two o’clock, we had 19-million transactions that were performed on the app. So, it’s a tremendous service opportunity for clients. While you’re on the app you have free data, so it doesn’t cost you anything and then we’ve introduced self-service devices and DNRs. DNRs are our ATMs whereby you can deposit money and you can withdraw money. About 28% of our cash distributors are actually coming from our DNRs and then our self-service devices, it’s not that often, I will acknowledge that I’m wrong, but I had to acknowledge that, because when we brought in the self-service devices, I said, “If we can move 20%, that’s in branch, if we can move 20% of our clients within the first month we’ve done exceptionally well”.

In the first month we’ve moved 60% of our clients to self-service devices, so a tremendous influence of self-service devices and you can actually see it in this figure. Remember, we measure every second that a client is in a branch, we understand what he’s doing, what he is performing. The blue line is actually the number of tickets that have been called and you  can see that strong growth that’s taking place to close to over 3-million that we’re handling that’s coming through. You can see in March 2016, our service delivery was about 26%. What that means is 26% of our people were waiting longer than 15 minutes to be served, so it’s not a very nice stat, but that is where we were.

If we look at what we’ve achieved, that figure is on 11.9% and in March and May so far we’re looking at around about 7%, so only 7% of our clients are waiting longer than 15 minutes to be served and you know the peaks and values that are taking place in retail. So, you can see the big effect that the focus is on service, making certain we have the right staff available and then to make certain that we have self-help devices where the volumes can be handles and that’s actually showing you the volume trend. On self-help devices last year we did 720-million transactions, in-branch 330-million, but I think if you look at December, you’re sitting with 18-million transactions being formed on self-help and we’re talking 30-million, 35-million in-branch. So, you can see the effect of what self-help has done, enabling us to service our clients better.

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Now I get that question, why are we still opening branches while everyone is closing and what is self-help doing. What we’re trying to do is to move transactions out of the branch and to have the ability to sell better to our client and when that client is in the branch, to optimise that client and make certain that he understands Global One fully, so that when he goes out there, he can talk to his friends and family. So, the functionality in the branch is changing, that we’re taking transactional out, but we’re focusing more on the selling side in-branch. So, for this year coming we still believe in opening 45 branches, but the big focus this year is just to upgrade our existing branches that are still in the old look and feel that we need to upgrade.

Service culture, you don’t achieve service without people and I will talk to people now, but a very strong service culture. We measure service right through. We’ve started now in November, that if a person comes into the branch, if he goes out you get an SMS, you can reply on the SMS, was the service good or bad and if it’s bad, the branch manager himself will phone you and ask you what was wrong with the service. Currently, we’re getting a 90% satisfaction call rate on that, so we’re quite pleased with that. I think the biggest accolades there, if you look at the Consumer Satisfaction Index, is for four years in a row, we’ve won it as the best retail bank. If you go and look at Ask Afrika on service, we’ve won it five years in a row, so that’s just giving you an indication of the service culture that there is in the branch.

Then the branch finance, the Top Ten Most Powerful Brands Internationally, that’s an award that we won and one that we really enjoyed this week, is to be voted the Best Digital Bank in South Africa. I think everyone is surprised. I think FNB is the most surprised that we’ve overtaken them, but that just shows you if you focus on simplicity and transparency and people understand what they’re doing, then they appreciate what you are doing. So, we had a very good year on service and there’s a big focus on the service side. If we look at service, you can’t do it without people, so there’s a big focus on leadership, people taking ownership. I’ll allude on that later on when I talk about the future. We’re still employing about 3,500 people a year. Remember, these are new recruits, so we’re bringing in about 300 people per month.

I don’t think there are many companies that can say we’re still employing 300 people per month in this economy. We had 5,200 people attending courses and if you look at training and this just shows you the emphasis on the training last year, we did 55,000 training interventions, making certain our people are ready to provide that service, 10,000 of those learning interventions were face-to-face and 45,000 of that was electronic. You can see on the functional, technical side, you can see the big focus there and that was the credit card and then you can see on the leadership side, the big focus on the leadership side and then to make certain that we comply and we can see the number of training interventions that was actually taking place on compliance.

So, there will be and always will be a big focus on the people side. If we look at credit, yes, interesting year, I’ve already mentioned that we’ve cut back in certain areas, so it was probably the most difficult year in my 17 years with the bank. We’ve made changes probably every single month to adjust and make certain we’re ready for the economy. Every time we think we’ve cut back enough, then we had to cut back more. We’ve brought in a credit estimate and that’s whereby a client can come into a branch and within two minutes we can assess the client and make certain and say to him, “Yes, you’re good for credit” or “You’re not good for credit” and you can see it in our applications. In November 2015 we’ve handled 320,000 applicants, in November 2016 you can see 410,000, so close to about 100,000 more applicants more per month that we’re actually handling.

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The interesting thing is if you look at our accept rate, that is if the client goes through our credit policy, the accept rate was 56%, that’s dropped to 39%; it’s currently on 36%. So what does that mean? There are 100 people coming in, only 36 people will be good for credit, and then the take-up rate is the rate that the client will say, “I’m happy with the offer and I’ll take it up” and that’s now at 31% or 27% currently, as we’re standing now. We see that continuing until the economy is actually starting to pick up. If we look at arrears, it’s quite an interesting and a busy slide. I think if you look at our arrears, it’s up from 5.6% to 6.3%. A big driver of that is that we’ve cut back on rescheduling. If you look at rescheduling clients that are in arrears and clients that are not in arrears, we’ve cut back quite a lot.

Clients that were in arrears, you can actually see with the book growth, we’ve actually kept that flat at 1.5-billion and then clients that were not in arrears, we’ve dropped that with 800-million, so if you look at your total arrears, it’s actually dropped from 13% to 12%. I think overall, given the economy, we’ve done well on the credit side. The more important thing is, are we well provided for and I think if you look at that last figure you can see if we take all arrears and everything that’s been rescheduled, last year this time we had 91% provided for and as we’re standing now we’re 107% provided for. So, if all those clients go bad, we’re 107% provided on them self. I don’t think there are many banks that can actually say that.

If we look at the credit card and maybe I must just give some perspective on the credit card, when we launched the credit card we said we were going to be conservative, we’re not going to be aggressive on the market. We’ll learn the credit card, it’s a new product, so we said we’ll launch for a seven, eight month period and then we’ll slowly but surely adjust the pricing and we’ll adjust our credit risk appetite. Currently we’re attracting about 20,000 clients per month that are joining us on the credit card. We’ve said in the video, we now have 133,000 people on the credit card. Our book on the credit card is already a billion after seven months, so that gives you just the size of what we’re handling. It’s growing with about 200-million per month, so we’re quite happy with the credit card’s growth.

Our next phase is actually aggressively looking and saying, “But, how can we penetrate this market and how can we optimise it?” and then we will start with above the line marketing in quarter three and the plan is that in the new year, we will look at people that are self-employed to actually start taking on that particular market. So, we’re quite happy with the performance of the credit card. I think if you’re looking six, seven months later and you already have a book of a billion, we’re quite happy with that performance.

If we look at funding, retail funding basically gives you an indication of the trust in the brand. If I look at our retail funding call that’s grown from R24bn to R30bn, if I look at our fixed term, it’s grown from R13bn to R17bn and then you can see the whole solid side is actually coming down because we’re managing it, we don’t need that funding.

Our capital adequacy is at 34%, so we’re quite happy with that growth. Our growth in the retail fix is around about R500m per month, so you can clearly see the trust in the brand and people accepting it and that then also for us, very importantly, André went out to the market to raise money, we don’t that, but when you believe it’s important to be in the market, we raised R500m, but we were 4.5 times oversubscribed. So we’re quite happy with the performance and that’s with a downgrade and certainly in the market, we’ve managed to be 2.5 times oversubscribed. International, it is probably the surprise that people didn’t expect. We always said we’re going to focus on South Africa, but whenever myself and Andre were overseas we were looking at certain areas, we came across this company Creamfinance. It’s a payday lending company, it’s operating at six countries.

It has many similarities to where Capitec was in 2000/2001, a very nice innovative, young and energetic management team. They have very sophisticated credit scoring models that we believe we can bring into our online business on this side. They’ve identified about 30 countries as possible places to expand to. We have the experience to grow a company from small to big, so we believe it’s a good match. We also believe while they’re building an online platform, we’ll build a digital banking platform on this side and I’ll allude to that later on. Then you can merge that all together and I think then you have a very unique product, so we’re quite happy with our acquisitions. So, it’s that first step to actually go international. It’s only an investment of round about R280m, so it’s a very small investment if you go and look at our whole balance sheet, but importantly, it’s giving us that experience on the international market.

The future, I think I’m going to kick off with our new brand campaign. If you look at our brand to date, we’ve always been focusing on the Ask Why campaign, very functional, what do you get as a client, the Join Us campaign, and we’ve moved basically over to a more emotional campaign and what I would like, this was launched on the 18th of May, so it’s very recent. It’s in line with our strategy going forward. We want to be the financial friend of the client, we want to support the client and you’ll see it now and going into the future, how we will work with the client and to make his banking better for him and how he can actually live better. So, we’re very excited about the campaign and we’re excited about the whole musical. We’ll play it to you later on, that you can actually hear it. So, it’s completely different and there are quite a lot of things that we’re doing to enhance the brand. It’s part of the journey that we’re on.

If we look at the future, the two things that will always be there is service and people, a very big focus on that. If I look at service, what we are working on now and it links to our efficiency side, is to have a single view of the client and a single view on a client that the look and feel of the client, what he is experiencing in-branch at BSC on an app, online, is exactly the same. Then very importantly, also is to have a full history of that particular client, so whoever works with that particular client knows exactly what’s happened in that client. I get irritated when I call to talk to a call centre, especially DSTV and I have to explain everything over again when I talk to a person, and they don’t have any history of it. So, that’s one of our drives, to make certain we have that full history.

Gerrie Fourie, CEO, Capitec

We’ve launched the whole CEO concept. That is basically, what I believe is every single person in the bank must be a CEO, he needs to take ownership of what he’s doing. It’s not only myself, so on that, as we’re looking at the client, the client is first, so everything you’re doing, you’re doing it for the client and you go that extra mile, you take ownership of that and then you need to have the energy on that. We’ve launched that about two months ago and it’s been taken on very successfully in the bank and then service measurements right across. If I look at efficiency, we’ve spent quite a lot of time to say how should the branch and the BSC and head office look of 2020 and 2025 .We’re bringing in quite a lot of new ideas and things that are going to come in, voice recognition, face recognition and things like that, that’s going to come into our branches and I’ll allude to that later on.

We are working constantly to say to ourselves, how can we improve the efficiency in the bank. On the people side, I think the most important thing is that culture of greatness. Good is the enemy of greatness, so we need to make certain our people are not average, we need to make certain our people are great and to achieve that, we need to inspire our people, we need to give them ownership, we need to lead them and that will be the focus going forward. On the business delivery side, maybe the biggest change in the bank for quite a while is we’ve worked on a waterfall method. If we develop new products or projects, waterfall means you look at the business specs, you spec that, then you do the functional specs, then you do the technical specs, then you test, and then you implement.

Our average on our project delivery was about 16 months. What are we sitting with? We’re sitting with a client base that is changing faster and faster. Needs are coming in quicker and quicker and we need to adapt much quicker, so what we’ve done is, to move the whole bank onto an agile platform that we’re working on two weeks’ prints and we’re starting with the business functional, technical and testing at the same time, but basically in a two-week sprint. Other banks and other companies are working normally just on the IT side, we’re doing it right across the whole company. So that’s quite interesting and we’re already down to about a nine months project delivery. Our aim is to bring that down to six months.

We’re spending quite a lot of time to increase our IT capacity. There are another 120 people in our budget.

Quality clients, I’ve already alluded to that, our market share is 10% and we would like to take that up to 20% over the next two years, so there’s a big focus to make certain that we penetrate that particular market. Gauteng and those areas are a big focus. You’ll see a big portion of our advertising campaigns and marketing spend is in those areas.

Read also: Gerrie Fourie: Here’s why Capitec’s disruption train keeps rolling

You can see us change a little bit from a branch, a branch manager and a consultant and be very simplistic, that’s the new world we’re going in and what we’re fighting is, to say to ourselves, how do we take these, FinTech and new technology and how do we bring it into the bank and how do we make certain that we can actually deliver to the needs of the client of 2020 and 2025. The scary thing is if you look at a ten year old or a five year old currently, an iPad is nothing new. Ten years from now that person is 15 years old, then you need to think about the demands that that person is going to put onto banking and the way that person would like to operate. So, that’s what we’re facing. What are we doing, where are we? We fully try and understand it.

We have a new digital department of about 120 people; it’s costing about R200mn, that’s separately operating in the company focusing just on digital banking. We’ve partnered with RocketSpace and MasterCard Club. Maybe I must explain that to you. In the world you have about three million FinTech companies. Now you can imagine, to evaluate all those FinTech companies to say what is going to work for us and what is not going to work for us, is impossible. So, what they actually do, they’re incubate this, they evaluate about a thousand, given your needs. They slim that down to about ten, 15, and then every three or four months our people are overseas actually working with these people and working with these FinTech companies to understand how to bring those ideas back.

We’re members of RocketSpace, we’re members of MasterCard Labs where we’re on a continuous basis going overseas and making certain that we’re on top of it. Just to give you an indication, our senior people last year did about 56 trips overseas and we will probably be close to about a hundred trips overseas this current year to make certain that we understand what’s happening internationally. Are we scared of FinTechs? I think a FinTech on its own and the one thing they don’t have or a couple of things they don’t’ have, they can’t handle volume, their security international security, they’re weak on, they’re not on regulatories but they’re very sharp and innovative. So, we believe the FinTechs on its own is not a big threat.

The important thing is actually to partner with the right FinTechs to make certain that they can enhance your whole digital space. That’s where we’re spending a lot of time. Just to explain to you, digital banking where we’re heading, what are we doing. Our first task is to make certain that we can identify a client and that we can on-board you anywhere, any time. So, that means you will be able to open an account anywhere anytime. We’ll use facial recognition, we’ll buy metrics, voice, we’ll take measures, identify your and then bring you in. For example, if you go into a branch, we’re piloting now in October, six branches with facial recognition, so as you come, we’ll recognise you and then we immediately would know what products you have, what products you don’t have and while you’re waiting we can start selling to you.

The one that I enjoy and people don’t believe me, but I’ve seen it in America last year when I was in San Francisco, was mood recognition. I would love to have that for my wife to understand her mood, but if you just look at the simplicity of that, is to understand if a client is angry, is in a hurry, whatever his mood is, then that gives you an insight into those consultants so that they can work with that client better. Mobile payments, there’s a lot happening in the mobile payment space. I think the old way of paying with a card is going to disappear, you’re going to pay with your cell phone, you’re going to pay with your watch, and you can pay by metrics. There are many changes taking place in the whole mobile payment space. We’re intensively looking at the format market to say how we can enhance the payment side in the informal market to open up new markets for us.

To give you an indication, we’re working with MasterCard on Qkr!. Qkr! is where you have the capability to, for example, if you want to go to a restaurant, you can actually order your food beforehand and when you arrive it’s ready and then the one that I enjoy is, if you have to pay you don’t need to call a waiter, which is your normal struggle and then the person needs to go and take a point of sale machine, you press a button, payment is done and you’re off. That we’ve launched, we have Masterpass, where you by QR code, you just swipe and your payment is done, as I think many of you know, the way SnapScan works.

There are many things that are happening on the electronic payment side. If I look at the rest of my financial life, what we’re working on that particular area, you have the rest of your financial, you have your banking on this side, you have your assets on this side, and you have your medical on another side. Therefore, if you’re looking at, for example, what is your equities and what shares are you investing, every time you need to go on a new app or new online and the whole purpose here, is to bring everything together under the Capitec app and you can see your whole financial world in one, giving you the ownership and understanding what’s taking place in that particular area.

Then on mobile banking, that is where we’re changing the app. It’s quite scary, you’ve just won the best app award and then we’re changing it, but what we are doing is, the first thing is, that we can personalise it. Currently, the app is the way we designed, you need to accept that, maybe that’s the best way, but you can personalise it to what is important to you. Then the most important thing is, we’re creating a platform underneath where you can plug in and plug out. What I mean by that is, if you want to partner with a particular FinTech, you can actually plug in and if you find a new FinTech that’s better, you can plug out and you plug in the new FinTech, so you give that opportunity for yourself to be more flexible on the integration side to be faster to the market.

Then the most important one is probably client insights where we’re going to use Big Data and machine learning, where we really want to understand the client’s behaviour, what is he doing on social behaviour, what is he doing on the transactional side, what is he doing, where he’s buying, so that in real time we can communicate to yourself and say but here are alternatives. Currently what we’re doing, we’ve updated marketing campaigns, it’s not real time, it’s on a 24 hour basis, but we can track you and we’ll know from GPS coordinates etcetera where you are and what you’re doing and then we can talk to you and say, hey here’s a better option and we have insights then in financial literacy because I think that’s one big area that we need to focus, is on the financial literacy.

The interesting thing is, if you look at what we’re building and the platform we’re building, the brief to the team is, we have 9-million clients, they need to build a platform that we can handle 90-million clients so that we are ready to take this international, so that is what we’re building on the digital side. From my side I would like to thank the shareholders, I would like to thank the board for their support, Riaan as Chairman for his support, the discussions we’ve had, to my management team, but I think the most important is to the Capitec people, the team, and the staff. Without them we won’t be successful, it’s one big team and that’s the Capitec team that makes us successful.