Capitec Bank has turned traditional banking on its head. For the second year running, it has been named the ‘Best Bank in the World’ by international banking advisory group Lafferty, and best value bank in South Africa by the Solidarity Research Institute.
Now the country’s second largest bank, Capitec disrupted the banking environment from the moment it emerged in 2001, led by Michiel Le Roux and now CEO Gerrie Fourie. “Looking back to when we started, we thought two million clients were a lot,” recalls Gerrie.
“Two became five million, and now we’re at nine-and-a-half million and still growing, with more than 120,000 new clients each month. I’m so proud of the service culture we’ve created, and that we always do what’s best for the client.”
Capitec’s ‘Bank Better, Live Better’ ethos flows through the entire organisation, as do its principles of simplicity, affordability, accessibility and personal service. Not far off 10 million clients, Capitec employs more than 13,000 people across 811 retail branches and maintains 4,000 of its own or shared ATMs.
Starting a bank
With an Honours degree in Financial Management and an MBA in hand, Gerrie started his career with Stellenbosch Farmers Winery in its Financial Planning Division. This was followed by five years managing the winery’s sales, marketing, production and distribution in the KwaZulu-Natal and OldTransvaal regions of South Africa.
“In 2000, I was approached by Michiel Le Roux to start Capitec Bank. For 13 years, I worked as COO for Capitec before being named CEO in 2014,” explains Gerrie. “We were a team then and we’re still one today. We saw
a lot of opportunities and we developed a business plan to change the way
banking was done in the country.
“We believed we could make a difference in the financial world and in the lives of our clients. The past 18 years have been spent putting that vision in place.”
We believed we could make a difference in the financial world and in the lives of our clients.
Capitec initially launched into the low-income segment of the South African consumer market, gradually working its way up towards the middle and upper-middle income segments.
“Since the 2008 global financial crisis, the regulatory status of the international banking industry has become a lot stricter. This is good from a security point of view, but there’s always the question of maybe it’s gone too far. The economic environment in South Africa has been very unpredictable in recent years, and past year was probably the most difficult one of my 17 years with the company,” he recalls.
‘Best bank in the world’
To combat sinking credit ratings, Capitec found itself cutting back month on month, and introducing a credit estimate to assess clients on the spot. “I believe we’ve done well in strengthening our business model. The biggest challenge for the banking industry now is finding that balance between regulation and client experience.”
Against these odds, for two consecutive years, Lafferty’s Bank Quality Rankings has named Capitec ‘Best Bank in the World’, the fastest growing brand in South Africa and the only bank in a group of 100 deserving
of a five-star rating. Among the indicators analysed were strategy, culture, customer satisfaction, and ‘living the brand promise’. Capitec delivered on all of these, and Gerrie sees this acknowledgement from Lafferty
as confirmation that the bank has a bright future ahead.
“We don’t strive to win awards. From the beginning, we vowed to stick to our four fundamentals – affordability, accessibility, simplicity and service. It’s our focus on those fundamentals that puts the client in control and sets Capitec apart. We understand the changing needs of our clients and we aim to keep meeting them as they develop.”
In May 2017, Capitec launched its new ‘Join Us’ brand campaign, moving away from its longstanding ‘Ask Why’ campaign that focused on explaining to clients the value of the Capitec model. A more emotional campaign, ‘Join Us’ was introduced to reflect Capitec’s desire to become a financial friend to its clients – helping them to bank better and ultimately live better.
“Our business model stems from our unique positioning in the market and the way we help clients make the best decision to suit their needs; not ours,”
“Our branches remain open during extended trading hours, with almost 50% open on Sundays. When a client opens an account with us, they get a comprehensive product that is fully integrated into our system. We treat all clients equally and you’ll find no hidden costs. We don’t believe in ad valorem percentages and we cost at a fixed price.”
Despite South Africa’s downgraded credit rating, Gerrie believes Capitec’s success in the regional market comes down to its simple and transparent way of doing things. “The biggest mistake a bank can make is to make everything too complex to the point that people don’t understand what’s happening. During our client consultations, both parties can see the screen so everyone is involved. We keep it simple and transparent.”
Capitec Bank grew its headline earnings to R2.05 billion for the period ending September 2017, despite applying a stricter granting strategy. This was particularly impressive compared with the R1.75 billion earned during the previous period ending August 2016. Gerrie says these strong results were achieved by creating a more personalised offering for clients.
Capitec’s all-inclusive banking solution, Global One, enables customers to transact, save and access credit in real time. “Our credit card has been a great success already and we are now completely paperless in our branches by using biometrics in place of client signatures,” explains Gerrie.
Harnessing the power of technology, the Global One card can be used in card machines, for online shopping and for telephone and mail orders around the world. “We are widely accessible through self-service banking options such as our mobile banking app, internet banking, self-service terminals and dual-note recyclers.”
This continued brand acceptance saw a huge increase in retail deposits and transactional growth, as well as self-service transactions. In line with this, Capitec changed its credit offering by lowering interest rates and credit card fees to bring the cost of unsecured credit closer to that of secured credit. The simplicity and good user experience of its internet and mobile banking app resulted in Capitec being voted best digital bank of 2017 by Columinate’s internet banking SITEisfaction survey.
“In a period of two years, we moved about 70% of our clients to self-help services, whether that was via an app or USSD [!unstructured!]. That’s around six million clients using USSD and more than two million clients using our app. Given South Africa’s demographics, it was a huge accomplishment to move such a large group to self-help devices and thereby reduce waiting time and give us more capacity in our branches.”
Although self-help is taking off, Gerrie says he will continue to open branches not for transactional purposes but for face-to-face selling and client retention and experience. He notes that most of the lower and middle-end market still prefer a personal interaction, despite the trend towards digital services.
Every time a client walks into one of its branches, Capitec analyses them from the moment they step in the door and through their entire consultation – always in pursuit of the ultimate client experience.
And the bank’s strategies are clearly hitting the mark. The 2017 South African Customer Satisfaction Index (SAcsi) revealed that overall satisfaction with South African banks has improved – with Capitec leading the way for the fifth year in a row.
Run by Consulta, the SAcsi benchmark offers impartial insights into the nation’s retail banking industry by blending a customer expectations index, perceived quality index and a perceived value index to get an overall result out of 100. Last year, Capitec scored 83.1, well above the average industry score of 76.5. Consulta also revealed a decrease in customer loyalty over the past three years, from 71.3 in 2014 to 68.7 in the latest 2016/17 benchmark.
Despite this, during the same period, Capitec Bank has enjoyed a steady increase in customer loyalty, with the least complaints and the highest rate when it comes to resolving complaints.
Gerrie spends a tremendous amount of time focused on his people, making sure they have a passion for their work. “I believe that every employee has to have a CEO mindset in their role. For us, this stands for Client, Energy and Ownership, and we use these three motivators to inspire our staff,” he says.
“Culture is an important part of Capitec’s DNA. We believe in a small company culture with not a lot of committees or groups. Each year, we hire close to 3,000 people and every single one of them is flown to Stellenbosch to spend 10 days learning about our core culture and what is expected of them in terms of service behaviour and selling.
“This is important to inspire and engage our young people. I always say
that if people understand why we do what we do, they’re much more inclined to do it too,” says Gerrie. “Leadership is all about ownership. You need to say, ‘I don’t wait for anyone else, I go and make things happen.
I don’t wait for anyone else, I go and make things happen.
If I don’t know the answer, I’ll go and find it.’ I encourage my people to take ownership of their environment
and their job so they can perform at their best.”
Established in 2015, Capitec Foundation is an independent, not-for-profit organisation responsible for managing the corporate social investment initiatives of Capitec Bank. As well as improving the mathematical and financial literacy of consumers and school children, the Foundation goes one step further by educating and upskilling teachers and school leaders through financial life skills programs.
“A big portion of our South African client base is financially illiterate and we want to bring them up to date. We give bursaries to select children in grades 10–12 to enable them to finish school and attend college, and we invest in teachers so they can plough that knowledge back into the community,” says Gerrie.
“I think the biggest challenge for us is making sure people manage their financial lives. We help them to live within their means and to understand a budget and stick to it. It’s a rewarding challenge and we’re putting in a lot of effort.”
Capitec Foundation also works closely with organisations that support abused and neglected women and children with one-off donations. Further, it funds education programs including Ikamva Youth, PrimeStars eduCate revision program, National Science Week and the University of Cape Town mathematics competition. In response to national disaster relief, the Foundation helps enhance the efforts of existing organisations, particularly in areas where Capitec’s clients are widely affected.
As part of its #LiveBetter Talks, Capitec aims to build relationships that go beyond those of traditional banking. Each talk is led by a different business leader, expert or entrepreneur and covers topics ranging from online reputation management and media training to legal aid, entrepreneurship and
the importance of personal branding.
Gerrie adds that the bank’s journey to success was not a solo one. “Business is built on partnerships. We work with key suppliers such as Microsoft and G4S to optimise and use their skills for the benefit of our business. What’s happening now is the emergence of dozens of fintech companies, so when it comes to working with people – as much as we’d like to – we can’t do it all on our own. Hence, it’s more important than ever for us to align with the right partners to help us increase customer satisfaction and stay ahead in the industry.”
Investing in the future
Looking ahead, Gerrie is certain the Capitec model has the potential to travel but, although he is keeping his eyes open for overseas opportunities, his focus is still on South Africa.
“We remain committed to growing the bank and optimising the client experience. We’re in the process of launching new products this year, and over the next 18–24 months our focus will be on anticipating what client needs are going to look like in 2025–30.
"We have an innovation team of about 20 people who are looking at the branch of the future. I think that’s where the digital environment is going to be important and our success will depend on how we partner with different fintechs and deliver on our strategies. It’s easy to talk about strategy, but it’s how you implement it and make it a success that truly matters.”
For this leader, a healthy work-life balance is key. “Winning an award or becoming a CEO is not my definition of success,” he says. “To me, success is when you achieve a balance between your work, your family and your friends. It can be extremely difficult, particularly as an executive, but if I can get that right then I feel happy and successful. This career path inspires me and gives me energy – and that’s what life is all about.”
Looking back on the early days of his career, Gerrie recalls a sage piece of advice from his former CEO that has stuck with him to this day. “I asked him, ‘How do you make sure you fulfil your potential and get to the next level?’ He told me that there are three phases in any job. The first is that you learn the job and fully understand it.
The second is you make the job your own. And the third is you develop someone underneath you to take over the position so you can move on,” he recalls. “I think this development process is something that can be applied throughout your entire career. I always try and ask myself, ‘Could I have done it better and what will I do differently next time?’”
Without a shadow of a doubt, Gerrie says joining Capitec was the best decision he ever made. “I always say it’s our baby that we’re growing. It’s interesting because after university I wanted to be an entrepreneur and not work for a big corporation. But when Michiel called me, I was given the opportunity to start something incredible from scratch.
“We created a team that has helped us get where we are today. It’s these people who inspire me and it’s so important to understand how they think, what they want to achieve, and what you can learn from them,” he says. “I believe you get two or three important choices in life. If you make the right ones, you’ll achieve your personal definition of success. People tend to not dream high enough. I say dream high, make a plan and go get it.”