Subscribe

Mobile banking propels Capitec's growth

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 18 Jan 2018
Capitec's digital banking transactions increased 46% year-on-year to 728 million transactions in February 2017.
Capitec's digital banking transactions increased 46% year-on-year to 728 million transactions in February 2017.

Smartphone app transactions now outstrip those undertaken in Capitec's physical branches, which contributed to operational savings of R180 million (US$12 5 million) for the bank last year.

Capitec bank says its strong focus on its digital banking strategy has propelled the bank to the forefront of innovative banking in SA, resulting in more transactions being conducted via the smartphone app than in physical branches.

The bank, which signs up around 120 000 new clients a month, says it has taken its market share in SA from 2% to 25% in just a decade and now has over nine million customers.

Speaking at the recent Gartner Symposium in Barcelona, Spain, where innovation was one of the focal themes, Michael Swart, head of Electronic Delivery Channels at Capitec Bank, explained:

"A mobile-first approach, with banking-grade security that offers clients a smooth experience was our goal from the outset, and we've achieved that."

Swart further explained Capitec's digital banking transactions increased 46% year-on-year to 728 million transactions in February 2017, while ATM and branch transactions increased only by 15% for the same period, to 330 million.

"Last month, more transactions were processed via the smartphone app than in physical branches - 71% of all possible transactions were done on self-help devices with clients banking via the remote app or phone. Digital is where the growth is, and this will only accelerate in future - which is why we believe in staying true to our mobile-first strategy.

"We're saving millions on branch costs and staff time - and it's cheaper for our clients to bank via our app. Everybody wins," added Swart.

Claude Schuck, regional manager for Africa at Veeam, says South Africa and the African continent are sterling examples of how financial institutions are pushing the envelope when it comes to revolutionising technology in their sector.

"Today's bank has become an icon on your phone: it's no longer the bricks-and-mortar building of old. That brings with it both pros and cons. As much as it offers the user speed and convenience, it also means that a customer's relationship with and loyalty towards the bank relies on technology," asserts Schuck.

Despite South African banks being at the forefront of digitalisation with their service offerings, a study conducted by FNB in 2016 found many customers are still reluctant to take advantage of these due to certain barriers and misconceptions.

"Although FNB has seen a 33% increase in the number of its customers earning less than R300 000 per annum using the FNB banking app, some in this segment are still wary of new technology. Costs, access to smartphones and lack of exposure and knowledge about using digital platforms were some of the barriers that prevent this market from banking digitally," according to the study.

Ryan Prozesky, CEO of Value Banking Solutions at FNB, explains: "Feedback received from customers enlightened us to the need for further education and to demonstrate the endless benefits and solutions provided by digital banking channels. One of the primary benefits being the cost-saving and convenience of being able to bank anywhere at any time."

Share