The drive to digital in South Africa – Capitec Bank 15 November 2021

Gerrie Fourie, CEO of Capitec Bank, details the digital dreams that inspire the country’s biggest digital bank. 
What value has digital generated for Capitec?

For the last 20 years, we’ve focused on nimbleness and agility as core to our business strategy. Our mission to make banking better has seen us invest heavily in digitization. We’re now South Africa’s biggest digital bank, with digital clients totaling over 8.6 million. Over the last financial year, we increased our digital banking clients by 28%. 
Digital transactions also grew by 36% to 1.1 billion. This demonstrates the ability of our system to scale at pace. At the end of February 2021, our active banking app users totaled 5.3 million, with active USSD users increasing to 5 million (from 4.9 in February 2020). In total, clients performed 526 million banking app transactions – up by 199 million compared to 2020 – in the 2021 financial year, and 536 million USSD transactions – up by 82 million. In the last six months, we achieved an increase in headline earnings of 18%. Our digital component was a strong part of that success. 
How have you driven your digital agenda?
Our tech focus came to the fore during the pandemic as we worked tirelessly to alleviate the impact on our clients and business operations. We saw our clients accelerate adoption of our digital services, and the permanent benefits and cost savings of this are expected to flow in the coming years. 
We drive our digital agenda by staying true to our purpose: to simplify banking so people can live better. The strong growth we’ve seen in our digital space is testament to the simplified, personalized service it delivers. Plus, lower transaction fees push value back to clients in a virtuous cycle. We have consistently introduced micro- and step-change innovations in the form of new products and services.
For example, we further bolstered our digital banking app with the integration of ‘Scan to Pay’ functionality on any major QR code. Additionally, we added our new virtual card for safer online shopping with no fees, plus the EasyEquities widget to enable clients to buy and sell shares seamlessly on their app. 
Right now, our focus is on a digital banking platform underpinned by self-service. For example, you can now join Capitec via our app simply by sending a selfie and scanning your ID.
As a company in the business of dreaming, we’re constantly looking ahead, beyond the obvious, for ways to make our clients’ lives better. Clients don’t always know what they want, but they’ll know when they get it. We fixate on what we’d love to give them and then rely on continuous creativity and innovation to push boundaries and forecast the future. In the age of the virtual economy, we are absolutely committed to making the clicks aspect of our business align – even surpass – with the bricks. We want a seamless experience across all our channels. 
How much have you invested in digital?
Over the last 20 years, it has and always will be a serious investment for us. It’s core to our business growth strategy and we see it as a crucial aspect of our offering. Going forward, we are hoping to liberate innovation held in smaller ecosystems through strategic plug and play partnerships that drive hyper-personalization and add value to our clients. We’re increasing efficiencies through AI and machine learning and optimizing how we harvest and use data. We are also investing to ensure our business bank is a digitally enabled, scalable solution. 
On a scale from 1 to 5, how do you rate the value generated by digital?
So far, 4. Over half – over 8.6 of 16 million – of our clients are using our digital banking services and this number is ramping up at an unprecedented pace as people get increasingly familiar with and reliant on the virtual world. It has garnered tremendous value for us as a business. Our expertise in this area is one of the things that sets us apart. However, there’s more value to unlock as we explore partnerships with other innovative players and continue our journey to personalize the banking experience. 
Has digital lived up to expectations? Has it really transformed the FS industry?
Digital should never meet expectations because these expectations should never stagnate. We should always be pushing boundaries and future-gazing. We should always be wanting to do more. Has digital transformed banking and the financial services sector? Not fully. We’re on the journey, and Covid-19 has accelerated sector-wide transformation, but the pace needs to ramp up. Transformation is about deliberate action. There’s a lot more this sector can do to add real, lasting value to people’s lives. 
We’re excited by how digital can help everyone wherever and whoever they are live better and drive economic inclusion. It also has significant potential to add value to SMEs, which form the backbone of our economy. 
How much more can digital contribute to the FS industry going forward?
So much more. It’s a true differentiator. Those that don’t invest in it will be left behind. We’re expecting to see big things in the customer journey space this year, with a focus on using real-time customer data to enhance omnichannel experiences. We’re also forecasting a continued emphasis on AI and machine learning. People attach a lot of emotion to the entity that manages their money. We have a profound role to play and we need to get better at learning when and how to engage with each client at crucial moments in their lives – for example, when they’re getting married, buying a car, or starting a business. 
 AI and ML can help us to identify these moments and enable us to create great experiences, at scale. We need to listen more and use our data to understand what our clients are signaling and respond appropriately to their different needs. Globally, there’s increasing competition in this sector, especially as tech giants like Apple and Google enter the arena. This will further ramp up the race to digitize and delight. 
From a Capitec perspective, we’re focused on fostering innovative payment systems and harnessing ecommerce to meet evolving needs. We’re also honing our cloud services and automation to enable future growth. And we are using our client data insightfully to continue creating value. 
What are the key threats to digital going forward and how prepared are you to manage them? (evolving customer needs driven by Big Tech, blurred lines between industries driven by ecosystem integration)
Cyber-risk – specifically fraud in the South African context. We’ve seen an increase in this over the pandemic as more people are working remotely. The scale of the SUNBURST malware attack was also unprecedented and really brought home the fact that many institutions still need to work on their cyber security. Technology risk factors have always been a focus for us and need to be a central point of concern for the entire financial services sector. 
Customer needs are evolving at pace, but we don’t see this as a threat; it’s an opportunity and one we’re prepared for. We’re also seeing more blurred lines between industries as ecosystems integrate. Again, while this escalates competition, it pushes us to avoid complacency and offers the opportunity for strategic plug-and-play partnerships. By breaking down siloes and edging into untapped ecosystems, we can unleash pockets of innovation to the benefit of our clients. As always, it’s about finding ways to have a meaningful impact on the financial lives of our clients. 
Going forward, we will remain focused on making banking simpler, more affordable, more accessible, and more personalized. That has been our mission for the last 20 years. It will continue to be for the next 20 and beyond. 

Want to know more about digital transformation in South Africa? Download your free copy of Efma-Oliver Wyman paper Digitizing financial services in South Africa

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