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Key Points
- Capitec aims to grow by focusing on small and medium-sized businesses and launching an insurance division to diversify its services.
- The bank is building on its success in digital services, looking to expand further in the prepaid airtime and electricity voucher markets.
- Capitec’s purchase of Avafin Holding Ltd is a key step in its plan to expand internationally and enter new global markets.
Capitec Bank Holdings, led by South African billionaire Michiel Le Roux, is gearing up to expand beyond its usual focus on retail banking. The bank has seen growth by targeting South Africa’s low-income retail clients, a group often overlooked by other banks.
Now, Capitec is looking to broaden its horizons by moving into the business sector and exploring international markets. This strategic shift marks an exciting new chapter for Capitec as it aims to diversify and reach more customers.
The move into business and insurance
Capitec, based in Stellenbosch, has traditionally concentrated on low-income depositors and unsecured loans, which has helped it grow into South Africa’s largest bank by customer numbers.
However, Capitec is now turning its attention to small and medium-sized enterprises (SMEs) as a new avenue for growth. The bank is also building an insurance business, seeing it as a critical area for expansion.
In a recent interview with Bloomberg, CEO Gerrie Fourie highlighted the opportunities within South Africa. He believes that better governance and cooperation between the government and the private sector could unlock a great deal of growth potential.
Capitec is also aiming to enhance its presence in digital services, leveraging its success in South Africa’s prepaid cell phone airtime and prepaid electricity voucher markets. The bank currently holds 32 percent of the prepaid airtime market and 27 percent of the prepaid electricity voucher market.
By February 2024, these digital services brought in R3 billion ($166 million) in profits, a increase from zero in 2022. This growth demonstrates Capitec’s ability to innovate and adapt to the evolving digital financial landscape, setting the stage for further expansion.
International ambitions with Avafin acquisition
Capitec’s growth strategy isn’t limited to the domestic market; it is also setting its sights on international expansion. In March 2024, Capitec acquired fintech group Avafin Holding Ltd, which operates in Poland, the Czech Republic, Latvia, Spain, and Mexico.
Fourie plans to transform Avafin into a fully operational bank, using it as a stepping stone for Capitec’s global ambitions.
Fourie envisions developing Avafin as a key platform for Capitec’s international growth strategy.
This “big dream” is to combine the strengths of both Capitec and Avafin to establish a strong presence in international markets.
Moving into these markets is a bold move for Capitec, which has mainly operated within South Africa but has shown consistent growth and resilience.
