Retail giants turn up the heat on Capitec as banking competition intensifies

Cape Town – South Africa’s banking sector is facing increased competition as major retailers, financial services companies and telecommunications operators expand their offerings, challenging Capitec’s strong position in the mass-market banking segment.

The latest development is a partnership between retail giant Shoprite and Investec, which will see the two companies introduce transactional accounts and debit cards, giving Shoprite customers access to additional banking services.

According to Business Day, the agreement will allow Investec to provide the banking infrastructure while Shoprite manages the customer-facing offering through its established retail network and digital platforms. The arrangement remains subject to regulatory approval.

The move comes as Capitec faces growing pressure from other businesses targeting the same customers. Pepkor, which owns retail brands including Pep and Ackermans, has received approval for a banking licence, while telecommunications companies such as Vodacom are strengthening their financial services and lending operations.

Significant advantage 

Investment analyst Keagan Higgins of Anchor Capital told Business Day that the Shoprite-Investec partnership could initially compete for customers’ spending rather than necessarily persuade them to abandon their existing banks.

“In that example, Capitec could lose some transaction income without losing the customer,” Higgins said.

He added that Shoprite’s established brand and existing financial services offering could help it attract customers, although competitive fees and reliable services would be important in convincing people to switch.

Higgins said Capitec, however, still has a significant advantage, with 26.6 million active clients and a broader range of services, including airtime and electricity purchases and its Capitec Connect mobile offering.

Abax Investments portfolio manager Justin Hollis said the partnership reflected a broader shift in the financial services industry.

Existing customer relationships

“The boundaries between banking, insurance, retail and telecommunications are becoming increasingly blurred,” he told Business Day, adding that businesses were using their existing customer relationships, distribution networks and data to capture a greater share of consumers’ spending.

The competition is also coming from digital banking businesses. According to Moneyweb, in a report by Bloomberg, GoTyme Bank has grown to 13 million customers, making it South Africa’s second-largest bank by customer numbers, and is targeting 30 million by 2036.

GoTyme chief executive Cheslyn Jacobs said: “I want us to get to one in two South Africans as customers.”

Meanwhile, Pepkor is preparing to launch its own banking business, potentially as early as 2027, using its extensive retail footprint of more than 6,000 stores to attract customers.

MyBroadband has also identified Pepkor, Shoprite and Old Mutual as major challengers to Capitec, with their strategies focused on attracting lower-income and emerging middle-income consumers.

Lower transaction

The growing competition is unfolding alongside regulatory changes that could further reshape the industry. Reuters reported that the South African Reserve Bank plans to open the country’s national payments infrastructure to non-bank operators, including retailers, telecommunications companies and fintech businesses, from mid-2027.

The reform is intended to increase competition, lower transaction costs and broaden access to digital financial services.

For Capitec, which has built its success around affordable banking and a large customer base, the challenge will be retaining customer loyalty as new competitors use established retail networks, digital platforms and partnerships to expand their financial services offerings.