Capitec Bank CEO Gerrie Fourie’s message to African leaders is clear; “Value partnerships and encourage co-operation. Working together and ensuring we deliver will make people believe in Africa and invest in Africa.”
Capitec has been the great South African banking success story of this century. It shook up a traditional banking model unable to cater to a huge, unbanked population in South Africa and now serves over 13 million clients. As the bank gears up for the expansion of its business banking offering, Mr Fourie discusses the key elements to Capitec’s success and explains how, in the age of disruption, South African banking’s great disruptor will adapt to a new era of change to avoid being disrupted itself.
AfricaLive: How would you define the identity of Capitec Bank?
Gerrie Fourie: We are a retail bank that was created from scratch nineteen years ago to take on the four traditional banks in South Africa. Our philosophy is recognising client needs and satisfying them. We’ve focused on two important areas which are; simplicity across currencies and optimising the client experience. This is reflected in the company we are today. We have 13 million clients, 140 branches and about 4000 people working for us. We have shown that if you focus and deliver things that the client trusts and believes in, there is a lot of success that one can achieve here.
AfricaLive: What does it mean to be an African financial institution at the moment?
Gerrie Fourie: We are only focusing on South Africa at the moment and plan to expand to other parts of Africa in a year or two. Our focus is on retail banking in South Africa at the moment. This is a country of about 1.9 million people with mortgages. There is, therefore, a need to look at credit in a completely different manner. This is why we have gone into unsecured lending and also alternative forms of credit for people who can’t access secured credit. We also just recently bought Mercantile Bank, which is a business bank. This acquisition is to cater to the small to medium-size businesses that we want to support.
AfricaLive: What are your goals, strategy, and timeline moving forward?
Gerrie Fourie: We want to do with business banking what we’ve done with retail banking. We believe banking can be a little complex and non-transparent for a lot of people. Our philosophy of simplicity and transparency will, therefore, be fundamental to our approach. We also need to move business from paper to a much more digitised system. This is something we are looking to achieve within the next eighteen months. Moving SMEs from paper-based systems to digitised systems will make their transactions easier and more transparent.
AfricaLive: We see a lot of SMEs fail so soon after being started, particularly in the SADC region. What role can Capitec Bank play in creating an environment more conducive to success for small businesses?
Capitec Bank: It goes back to what I mentioned earlier about migrating to digital systems and abandoning paper systems. In Japan, the government is very keen on this because when you do it, you start to build data. The more data you have, the more banks will provide credit in a more informed manner. Companies like ours have a massive role to play in mentoring and advising smaller companies. It is not easy to start a small business, especially if you do not understand cash flow. If you don’t manage cash flow properly, you will make decisions that will make your business fold. This is why we have to mentor small business owners and advise them. Solving the SME failure problem will be a combination of building data, mentoring people, and also government involvement.
AfricaLive: Do you believe there is a mismatch between education output and the needs of businesses across South Africa? If so, what can the finance sector do to remedy this?
Capitec Bank: There is a mismatch because I don’t think Africa is producing the right people with the right skills. This is probably because we are using the old schooling system that is class-based and teacher dominated. Rural schools are especially disadvantaged because they don’t get access to skilled educators because few want to be stationed there. We, therefore, need to look to electronic solutions and the internet to make knowledge available to all.
AfricaLive: Is Capitec Bank involved in local community work? If so, what activities are you currently undertaking?
Capitec Bank: We are involved through our CSR programme where we give bursaries to needy students. We have also realised that we need to upscale schoolmasters. We do this by teaching managerial skills to aspiring managers and upscaling teaching skills to aspiring teachers. We are also focused on teaching financial literacy so that people can take care of their finances and themselves better.
AfricaLive: What are the latest trends you are looking to implement to remain relevant and agile in the current market?
Gerrie Fourie: We realise that the fourth industrial revolution cannot be stopped. It is upon us and it will play a big part in enhancing lives. We are, therefore, spending a lot of time learning about artificial intelligence and machine learning in a way that will improve our services. The fourth industrial revolution will see client needs change quicker and quicker. We must be versatile enough to respond to these changes.
AfricaLive: What does the evolution of financial services mean to you?
Gerrie Fourie: As a financial service provider, you need to provide that total client experience. You must make sure that clients understand your offering, and that there is transparency. If you don’t do that then it becomes harder for customers to develop trust in you. Financial companies must also look at some of the best companies in their field and look at what they offer. They then must differentiate themselves by plugging in what works for them and discarding what doesn’t.
AfricaLive: Are you confident that Africa will take advantage of the Africa Free Trade Area Agreement and break down trade borders?
Gerrie Fourie: There is great potential if leaders of different countries look at Africa and put it first. There is a need for strong leadership and the agenda must be Africa and not individual countries.
AfricaLive: How can the perception of Africa as high-risk be removed from the mind of investors?
Gerrie Fourie: Africa has always shown great promise and what it needs now is to deliver on that promise. It is upon us to deliver on promises and execute plans that will make investors believe in the African story.
AfricaLive: If you were to bring key stakeholders in both the South African private and public sectors here for a roundtable meeting, what would be your main focus for that meeting?
Gerrie Fourie: I would emphasise the need to work together on one or two things and not ten things. Prioritising and focusing our energies on a single agenda at a time will help us execute better. Only through proper execution will we know what works and what does not.
AfricaLive: How do you define success for Capitec Bank?
Gerrie Fourie: Success can be difficult to measure. It is a matter of setting objectives for you and meeting them. Success for us will be setting bars higher and not getting complacent. A continuous improvement attitude will save us from complacency and will keep our customer base loyal.
AfricaLive: If you could only send one message to African institutions, what would it be?
Gerrie Fourie: I would tell them to value partnerships and encourage co-operation. Working together and ensuring we deliver will make people believe in Africa and invest in Africa.