South Africa’s banking landscape has undergone a fundamental transformation. For decades, the “Big Four”—Standard Bank, Absa, Nedbank, and FNB—reigned supreme, focused on middle- to high-income customers and often overlooking the vast low-income market, considered too risky, too costly, or simply “unbankable.” But today, it’s Capitec that holds the crown as South Africa’s biggest bank by customer numbers (BusinessTech, 2025) —proving just how wrong that assumption was.
Capitec’s story is not just about size; it’s about the reshaping of what it means to be a bank in a digital, inclusive era. It’s also a masterclass in listening to the market (de Lange, 2013; Lourie, 2024).
The Myth of the “Unbankable”
Historically, banking in South Africa mirrored deep socioeconomic divides. Millions were left out of the formal financial system, either due to lack of documentation, irregular income, or the prohibitive costs of traditional banking. For legacy institutions, serving the low-LSM (Living Standards Measure) market simply didn’t make financial sense. The World Bank (2022) identified these barriers, such as a lack of access to banking facilities and financial products, as significant obstacles preventing many South Africans from formal financial inclusion. Additionally, research by Wentzel et al. (2016) found that socioeconomic factors, such as education and income levels, play a more crucial role than location in excluding large parts of the population from accessing financial services.
That thinking created a gaping hole in the market. And Capitec filled it.
Founded on 1st March 2001, Capitec didn’t just build a bank—it simplified what was overly complex, and used technology to drive down costs and pass those benefits to customers (Mthethwa, 2025).
A Model Built on Simplicity and Trust
Capitec’s early differentiator was simple pricing. While traditional banks layered fees on top of fees, Capitec offered one transparent account with low, flat charges and easy access (BlueAlpha Funds, 2019). More than just financial innovation, this was about dignity and giving people control over their money without the fine print.
Its branch design was also different with an open-plan, “consultative rather than transactional approach”. This design strategy was implemented to create a welcoming environment where customers feel more engaged and involved in their banking interactions. According to Capitec’s 2014 Integrated Annual Report, the bank introduced “side-by-side consulting” as part of its new branch design. This system-driven service flow enables clients to feel part of the service process, providing them with all the options and information needed to support decision-making.
And then came the tech. Capitec rapidly evolved into a digital-first institution, with a mobile app that’s now among the most used in the country. Today, the bank serves over 21 million clients, 12 million of whom actively use its app – a figure traditional players can only dream of (Capitec, 2025).
Challenging the Incumbents
Capitec’s rise forced the old guard to change. Suddenly, digital transformation wasn’t optional. Pricing strategies were re-evaluated. Innovation labs were born. And more importantly, banks started thinking differently about customer experience.
Standard Bank, recognizing the evolving digital landscape and shifting customer expectations, has been enhancing its digital platforms and customer engagement strategies. This evolution reflects a broader industry trend towards more user-friendly and accessible banking solutions, a movement significantly influenced by Capitec’s innovative approach (Louw & Nieuwenhuizen, 2020)
What was once considered an upstart is now the benchmark.
Financial Inclusion as a Growth Strategy
Capitec proved that financial inclusion isn’t charity—it’s smart business. The bank not only tapped into the mass market, but it did so profitably, with a lean cost base and robust credit controls. As a result, it now commands a significant share of the personal loan market, and is expanding into new verticals such as insurance and business banking.
More than anything, the bank’s rise illustrates that the future of banking in South Africa—and arguably the continent—belongs to those who can bridge the gap between scale, technology, and inclusion.
The Road Ahead
As South Africa’s digital economy accelerates, younger consumers increasingly demand seamless, personalised, and affordable banking services. Banks that fail to adapt risk obsolescence. Capitec continues to expand its ecosystem, investing in technology, artificial intelligence, and strategic partnerships to future-proof its model.
The traditional banking sector, dominated by a few large institutions, has historically been resistant to change, partly due to heavy regulation and high barriers to entry. However, Capitec’s success demonstrates that innovation and customer-centric approaches can disrupt even the most entrenched markets, especially when banks prioritise customer needs and financial inclusion (M&G Investments, 2019).
Lastly, Capitec demonstrated that this market was not only viable—it was transformative. Its business model is built on four pillars: affordability, simplicity, accessibility and personalised service (de Lange, 2013). And now, other players are following suit. If we look at the sector’s most recent new entrants, many are targeting lower LSM consumers directly. African Bank, TymeBank, and Bank Zero are all positioning themselves to serve the entry-level market (M&G Investments, 2019). This competitive pivot affirms the long-term value of inclusivity in banking and reflects a broader industry shift towards customer-centric, tech-enabled models.
References
- BlueAlpha Funds, 2019. Looking Back: Capitec. [online] Available at: https://www.bluealphafunds.com/wp-content/uploads/2019/07/Looking-Back-Capitec.pdf
- BusinessTech, 2025. South Africa has a new biggest bank. [online] Available at: https://businesstech.co.za/news/banking/822283/south-africa-has-a-new-biggest-bank/
- Capitec Bank, 2025. SA’s fastest-growing brand | 2025. [online] Available at: https://www.capitecbank.co.za/blog/news/2025/sas-fastest-growing-brand/
- de Lange, M.C., 2013. A Strategic Analysis of Capitec Bank Limited within the South African Banking Industry. Magister in Business Administration, Nelson Mandela Metropolitan University Business School. [online] Available at: https://core.ac.uk/download/pdf/145052681.pdf
- Lourie, G., 2024. How Capitec Is Succeeding As A Digital Bank In South Africa. TechFinancials, 2024. [online] Available at: https://techfinancials.co.za/2024/04/23/how-capitec-is-succeeding-as-a-digital-bank-in-south-africa/
- Louw, C. & Nieuwenhuizen, C., 2020. Digitalisation strategies in a South African banking context: A consumer services analysis. South African Journal of Information Management, 22(1), a1153. [online] Available at: https://sajim.co.za/index.php/sajim/article/view/1153/1743
- M&G Investments, 2019. Banking on Change. [online] Available at: https://www.mandg.co.za/insights/articlesreleases/banking-on-change/
- Mthethwa, S., 2025. South African Capitec Bank posts 30% rise in annual profit. Reuters, 23 April. [online] Available at: https://www.reuters.com/world/africa/south-african-capitec-bank-posts-30-rise-annual-profit-2025-04-23/
- Wentzel, J.P., Diatha, K.S. and Yadavalli, V.S.S., 2016. An investigation into factors impacting financial exclusion at the bottom of the pyramid in South Africa. Development Southern Africa, 33(2), pp.203-214.
- World Bank, 2021. Financial inclusion in Sub-Saharan Africa: Overview. [online] Available at: https://www.worldbank.org/en/publication/globalfindex/brief/financial-inclusion-in-sub-saharan-africa-overview
