{"id":843820,"date":"2025-11-19T14:30:00","date_gmt":"2025-11-19T12:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=843820"},"modified":"2025-11-19T14:27:06","modified_gmt":"2025-11-19T12:27:06","slug":"capitec-under-siege","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/843820\/capitec-under-siege\/","title":{"rendered":"Capitec under siege"},"content":{"rendered":"\n

Two new South African banks, OM Bank and Pep Bank, are targeting Capitec\u2019s market with affordable and convenient banking services.<\/p>\n\n\n\n

This week, news broke that Pepkor is planning to partner with Investec to open bank branches in South Africa that offer zero-fee services.<\/p>\n\n\n\n

Pepkor is a dominant player in South Africa\u2019s discount and value retail sector, serving the lower-to-middle-income consumer segments.<\/p>\n\n\n\n

It has numerous prominent retail brands in its stable, including PEP, Ackermans, Dunns, Shoe City, and Tekkie Town.<\/p>\n\n\n\n

The new venture, dubbed \u201cPep Bank\u201d, will use Pepkor\u2019s 6,000-store network to reach millions of lower-income customers.<\/p>\n\n\n\n

The profits of the new venture would be split between the retailer and Investec, which focuses on high-net-worth individuals in South Africa.<\/p>\n\n\n\n

By opening Pep Bank within its existing stores, the retailer can roll out branches quickly and attract customers who already frequent its discount outlets.<\/p>\n\n\n\n

It can also use the substantial data it has collected on customers to tailor financial products for them more effectively.<\/p>\n\n\n\n

Pep Bank will compete head-on with Patrice Motsepe\u2019s TymeBank, which has banking kiosks at Pick n Pay, Boxer, and TFG stores.<\/p>\n\n\n\n

It will also compete with Capitec, which has been targeting the mid- to low-income market since its launch.<\/p>\n\n\n\n

Offering affordable banking services to the traditionally unbanked has been a key factor behind its explosive growth.<\/p>\n\n\n\n

Capitec’s flagship product from the beginning was a single, simple, all-in-one transactional and savings account.<\/p>\n\n\n\n

This contrasted sharply with the traditional banks’ tiered, complex account structures with hidden fees.<\/p>\n\n\n\n

Capitec operates on a low cost-to-income ratio, allowing it to charge lower fees. This affordability was the primary hook for the price-sensitive mass market.<\/p>\n\n\n\n

New banks, including TymeBank and now PEP Bank, use the Capitec playbook to launch banking services for the mass market.<\/p>\n\n\n\n

OM Bank also after Capitec’s market<\/h2>\n\n\n\n
\"\"<\/a>
OM Bank CEO Clarence Nethengwe<\/figcaption><\/figure>\n\n\n\n

OM Bank, which is part of Old Mutual, has unveiled its plans to compete against the country\u2019s biggest banks and take on Capitec in the lower end of the market.<\/p>\n\n\n\n

This plan involves leveraging Old Mutual\u2019s existing insurance client base, its Money Account product, and offering a unique combination of insurance and banking services.<\/p>\n\n\n\n

Being able to leverage Old Mutual\u2019s Mass and Foundation insurance cluster, which has over seven million clients in South Africa, gives the bank a strong starting position.<\/p>\n\n\n\n

The ability to win over customers from other banks is crucial for OM Bank to succeed, with it estimating that it needs 2.8 million clients to be profitable.<\/p>\n\n\n\n

It aims to reach this milestone by the 2028 financial year, with the bank running at an annual loss of R1.1 billion to R1.3 billion until then.<\/p>\n\n\n\n

OM Bank targets South Africans who earn between R8,000 and R80,000 per month, which means it is in direct competition with Capitec.<\/p>\n\n\n\n

Capitec dominates this market segment, serving 25 million clients. However, OM Bank is well-positioned to effectively compete against Capitec.<\/p>\n\n\n\n

OM Bank CEO Clarence Nethengwe said that the bank’s banking app generates around 24 times more interactions per client per year compared to alternatives.<\/p>\n\n\n\n

This provides immense opportunities for Old Mutual to use the banking app to cross-sell its insurance and investment products to clients.<\/p>\n\n\n\n

However, it first has to get these clients, with the bank currently onboarding around 5,000 customers a day.<\/p>\n\n\n\n

It informed investors and analysts that it has 140,000 clients, having launched just three months before.<\/p>\n\n\n\n

This rapid growth has been driven by converting existing clients from its Money Account offering and Old Mutual Finance to the bank.<\/p>\n\n\n\n

OM Bank also has another crucial headstart on other new banks, with Old Mutual Finance\u2019s R15.5 billion loan book and 346 branches incorporated into the bank.<\/p>\n\n\n\n

Nethengwe said OM Bank is not focusing on an unfamiliar client base, as it already knows the individuals it is targeting through the insurance business.<\/p>\n\n\n\n

This has enabled the bank to build its value proposition around these clients and their needs, giving it an edge over incumbents.<\/p>\n","protected":false},"excerpt":{"rendered":"

Two new South African banks, OM Bank and Pep Bank, are targeting Capitec\u2019s market with affordable and convenient banking services.<\/p>\n","protected":false},"author":10,"featured_media":787101,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[1798,20634,24175,4076,13455],"class_list":["post-843820","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-capitec","tag-om-bank","tag-pep-bank","tag-pepkor","tag-tymebank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/843820","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=843820"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/843820\/revisions"}],"predecessor-version":[{"id":843826,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/843820\/revisions\/843826"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/787101"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=843820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=843820"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=843820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}