The reality of Capitec’s 21 million customers in South Africa

While Capitec banks more than 21 million customers in South Africa, only a third of those clients are core clients taking up products and transacting frequently.

Capitec is South Africa’s biggest bank by customer numbers, recording over 21 million customers at the end of August 2023.

The group banks over a third of South Africa’s population, and leads its competitors by quite a large margin on this metric.

However, in the group’s interim results ending August 2023, the bank presented another view of its customer base, showing that it has what it calls a “fully banked” client base of 7.5 million.

Capitec chief executive officer Gerrie Fourie said this refers to a core group of retail clients who bank first with Capitec.

These clients have average monthly inflows of R3,500 into their accounts and meet two or more of the electronic outflow requirements (ie transaction requirements), good banking behaviour or product usage requirements.

The disparity between a 7.5 million core and 21 million clients overall is quite significant.

Explaining the disparity, Fourie said that many South Africans have two or more bank accounts. There are also a host of accounts – such as SASSA accounts – which do not engage with the bank more broadly or don’t exhibit ‘positive banking behaviour’.

However, he stressed that the 21 million accounts are not dormant. He said the 21 million clients Capitec counts are what it considers active clients, which the bank is earning some form of income from.

“If we don’t make an income, then the account is inactive,” he said.

Fourie said that simply counting accounts would show Capitec with 26 million or 27 million ‘clients’.

Looking at the 7.5 million “fully banked” clients, for Fourie, this is the core: the “first of wallet” clients that bank with Capitec first, take up its products, and transact frequently. The key challenge for the bank is converting more of its active base into these core customers, he said.

“We see the 21 million clients as our potential client base and the 7.5 million (are those that) take up our products and transact with us, etcetera.”

“We also have 11 million digital clients – the question is how do we get these clients to take up more products and transact with us and to optimise it?”

When asked whether the bank would try target higher-income clients to achieve its goal of expanding this core base, the chief executive was adamant that the bank wouldn’t put clients into groups or restructure its business to meet specific needs.

“If you look at the higher-income brackets, we already have an 11% or 12% share of that, and we’re making inroads all the time,” he said.

“When we set up our business plan in 2000, we said we want to bank 95% of all South Africans – but we won’t offer a special product with a special price and a special card for the top-end.”

Fourie said that all clients at Capitec will be treated exactly the same – all products and pricing are the same, and the product range it offers will always be suitable for 95% of the population.

“We don’t see the need to have six or seven classifications saying ‘you are poor’, ‘you are rich’, ‘you have blue eyes’ – we treat all clients exactly the same.”

More directly, Fourie said that Capitec “will definitely not go into private banking“.

He said that the private banking sector carries its own demands and challenges, including the need for financial advisors to manage their wealth – but the concept goes against the philosophy of Capitec’s simplified ‘one account’ banking.

“I’ve never understood why this client gets X and this client gets Y,” Fourie said. “For us, those 95% of South Africans hold value in themselves, and we’re seeing those inroads coming through very nicely.”

Read: Battle of the banks 2023: Capitec vs Standard Bank vs FNB vs Absa vs Nedbank