FT tells world how Capitec beat SA's Big Four at their own game

A South African bank doesn't often get the Financial Times treatment. Capitec just did. The FT's Monica Mark tells readers in London, New York and Hong Kong how a start-up built on two payday loan shops became the country's biggest bank by customer numbers. It now has 26 million clients. Capitec threw out the bulletproof glass and put its branches near bus stops. It also bet that ordinary South Africans were worth banking. Now it is chasing small businesses, the informal economy and markets beyond our borders. So what does the world's money see when it reads this? A home-grown success story. For a change..By Monica Mark.When Capitec Bank opened its doors in 2001, few expected that a start-up based on rejecting almost every convention of South African banking would last long in the continent’s most sophisticated market.Gone were the armed guards stationed outside fortress-like branches, and cashiers behind bars and thick bulletproof glass. Capitec opted for cash-light branches, built near bus stops and town centres, with longer opening hours for working Black commuters. Most radically, it dispensed with the conventional wisdom that lower-income South Africans were not worth banking.Two decades later, the lender that grew out of a handful of payday loan shops boasts 26mn clients, making it South Africa’s largest bank by customer numbers.Its rise has drawn comparisons with Brazil’s Nubank, which similarly built a mass-market franchise around simple, low-cost banking before expanding across Latin America. While Capitec achieved its growth within a single country, the lender is now setting its sights beyond South Africa.“They reshaped the South African banking landscape, but a banking success like this is unusual globally,” said TJ Strydom, author of Stalking Giants, a history of the bank. “They waged a price war on all the established banks and they did this while expanding financial inclusion.”At the end of each month, queues snaking around a building housing a Capitec ATM in downtown Johannesburg’s working-class district reflect the scale of a bank that says it serves more than half of South Africa’s adult population.“My salary goes into Capitec, but once I get home, everything is cash,” said Thami Ntuli, a security guard who uses banknotes for everything from haircuts to groceries in his Soweto township. Like many customers, he is paid electronically but earns and spends money in a vast informal economy that still runs largely on cash.That divide between digital banking and a cash economy is at the heart of current government policy — and Capitec’s ambitions. As part of efforts to revive an economy that has stagnated for more than a decade, policymakers are embarking on the biggest overhaul of the informal business sector in the democratic era.Capitec chief executive Graham Lee told the FT earlier this year that the bank’s next phase of growth lay in extending financial services to the entrepreneurs and small businesses that drive an informal sector estimated to account for about a quarter of South Africa’s GDP.“Capitec was built on the conviction that South Africa’s majority were creditworthy and underserved,” he said. “Twenty-six million active clients later, I think that thesis has been proved.”While the bank’s breakneck retail growth would inevitably slow as it became “a significant proportion of South Africa”, the next opportunity lay in business banking — particularly serving small firms and “people with hustles”, he said.The pivot may not be as straightforward. With about 85 per cent of South African adults now holding a bank account, future growth will increasingly depend on persuading customers to move — and business clients are typically the hardest to win, analysts said.“There’s a saying that it’s far easier to get a divorce than to change a business bank account,” said Asief Mohamed, chief executive of Cape Town-based Aeon Investment Management. “We are happy with the prospect of small business growth, but it’s not going to be as fast as in the individual market.”Whether Capitec can repeat its retail success will define its next chapter. “Capitec won by doing one thing brilliantly — making banking simpler and cheaper,” said David Shapiro, chief global equity strategist at Otto1890. “The question now is whether it can preserve that DNA as it grows into a much broader financial-services group.”Capitec emerged as South Africa’s financial system was being reshaped by the end of apartheid, during which the Black majority was excluded from owning property in urban areas, building up assets or accessing formal banking and credit.After democracy in 1994, demand for credit exploded. “Freedom was in the air,” Strydom said, and for many access to credit became a symbol of participation in the new economy.South Africa’s century-old Big Four banks — Standard Bank, First National Bank, Nedbank and Absa — were slow to adapt to the country’s newly bankable majority.“The incumbents were, in a sense, asleep. They had a lot of legacy systems, and it was difficult for them to switch to a different mindset,” said Mohamed.A rash of payday microlenders stepped in to fill the vacuum with some controversial lending practices. Capitec’s founders bought two payday loan shops, professionalised them and gradually used them as a springboard into banking.An unusually hands-on management team also set Capitec apart. “Before they opened the branch, they used to go to the taxi ranks, talk to the people, spend a day there,” said Mohamed, leading to branches far from traditional banking districts.Capitec would only launch a product if it could offer it at least 40 per cent cheaper than rivals, Strydom said, driving down transaction fees across the industry and forcing legacy banks to rethink their retail business. “There are many things that Capitec did that became the norm.”Attention is shifting to what remains outside the banking system. Statistics South Africa estimates 5.7mn people — one in three of those in work — are employed informally, while many more depend on township businesses, spaza shops and street traders for their livelihoods. Although most now have bank accounts, much of that economic activity remains invisible to lenders and policymakers. The lender says its business clients rose 71 per cent to 456,000 in the year to February.Last year, Gerrie Fourie, a former Capitec chief executive, sparked a heated national debate when he suggested South Africa’s official unemployment rate of about 30 per cent was closer to 10 per cent if informal economic activity were taken into account.The remarks prompted talks between Fourie, Statistics South Africa, the Presidency and National Treasury, culminating in an agreement to begin developing a register of informal enterprises.That coincided with the biggest rewriting of business rules since the early 1990s, including making it easier and cheaper for informal businesses to register. Others are eyeing Capitec’s mass-market crown. Pepkor, the African retail giant behind Pep, Ackermans and Bradlows, is building a banking business around many of the same lower-income consumers who fuelled Capitec’s rise.Its PlusB banking venture aims to build on an existing financial-services business spanning lending, insurance, money transfers and bill payments rather than starting from scratch. .Read more:.Capitec Bank delivers strong interim growth driven by client-first innovation.More than 32mn customers visit its stores every year and its network of more than 6,000 outlets is larger than the combined branch footprint of South Africa’s four biggest banks.Still, after posting record profits for four straight years, Capitec is looking to launch beyond South Africa within five years, Lee said. “We’re scanning for markets where . . . what we’re good at can translate into a meaningful difference in that country,” he said. “Right now the world is open.”.© 2026 The Financial Times Ltd..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. 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FT tells world how Capitec beat SA's Big Four at their own game

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