Capitec going after South Africa’s hidden R750 billion sector

South Africa’s biggest bank by clients is planning to target its business services towards small-, micro- and medium-sized enterprises (SMEs), with a specific focus on the elusive informal market.

Since launching its banking business, Capitec has seen immense growth. This is mainly because the bank has extended the service to many of its personal banking clients.

At a recent media day event, the bank revealed that 82% of its business banking clients are also personal banking clients.

The bank has 218,207 business banking clients, 43,727 of which are new business accounts opened within the past three months.

Capitec believes its services could fit the needs of over 3 million SME’s, of which 72% are informal.

South Africa’s informal market primarily comprises small and medium-sized businesses, typically owned by individuals, and is largely overlooked in the country’s banking sector.

This is because the market is incredibly difficult to penetrate, and very little data is available to give larger corporations insight into its size and the needs of these businesses.

However, this is where Capitec has a significant advantage. As the country’s biggest bank by customers, with an active client base of over 24 million, Capitec has access to a vast amount of data, which it can use to target these elusive businesses.

The bank uses this data to its advantage, identifying which personal banking customers may also run small businesses and could benefit from its business banking services.

The bank explained that it believes these informal market – or emerging market, as Capitec calls it – businesses have been overlooked and, in other cases, overcharged, for years.

This is because traditional business banking models are not always designed with these businesses in mind – what works for a major retailer like Shoprite would not work for a spaza shop.

Therefore, Capitec said it kept these emerging market businesses top of mind when designing its business banking model.

Capitec’s strategy

While Capitec’s business banking model needs to address different needs than its personal banking services, the bank built it with the same four principles in mind – simplicity, affordability, accessibility and personal experience.

These four fundamentals were behind Capitec’s meteoric rise in the 2000s, allowing it to take on South Africa’s Big Four banks.

Therefore, the bank is also relying on these principles to enter the business banking market, which has become highly competitive in recent years.

This is not only because most of South Africa’s large, traditional banks offer business banking services, but also because many smaller fintech companies are competing for market share.

For example, Yoco has taken the SME payments market by storm over the past few years, offering small businesses access to an affordable digital payments system.

If Capitec wanted to compete, it needed to design its business banking offering to encompass all the needs of small businesses, including pricing, payments, and lending.

In terms of pricing, Capitec applied the same transparent and simple strategy it uses for its personal banking services.

As with personal banking, Capitec only offers one type of business banking account, which sets it apart from other major banks with multiple different account options at varying monthly rates.

A personal bank account at Capitec charges a flat R7.50 monthly fee, while its business banking account is priced at R50 a month.

While this monthly fee is higher for business accounts than for personal accounts, Capitec has decided to make other transactions cheaper for business clients.

This will incentivise small, emerging market businesses to open a business banking account for their businesses, rather than using their personal bank accounts for business transactions.

Capitec compared its pricing structure against several of the country’s other business banking accounts. It found that, based on publicly available information from the respective banks’ websites, their fees are significantly lower.

This can be seen in the table below.

Regarding payment solutions, Capitec has ensured that it offers all the payment services merchants may need.

This includes a point-of-sale device with low, transparent commission rates and a flat cost to buy the machine itself.

In terms of loans to small businesses, Capitec’s access to a vast amount of data has also proven to be a boon.

Over the years, as the bank has had to diversify its income and shift away from unsecured lending, it has had to perfect its credit scoring strategy.

Therefore, the bank can now accurately score its customers’ loan repayment ability, which allows it to offer small business owners loans and overdrafts in around five minutes through the Capitec app.

This is ideal for the owner of a small retail business, for example, who may need the overdraft to buy more stock to sell the next day.

Capitec said its scored loan balances were up 111% to R1.26 million in the 2025 financial year, compared to 2024’s R596 million.

Additionally, Capitec is currently developing a new lending product, an unsecured cash flow product, which is in the pilot stage and is set to launch soon.

To ensure personalised service, Capitec has opened 19 business centres across the country and a relationship suite in Johannesburg, which are designed to exclusively assist business customers and offer personalised service.

Capitec CEO Gerrie Fourie said this ensures that Capitec feels like “a bank that knows you are”.

He said the bank has ensured that whenever a business banking customer calls, the customer service team can open their profile and know exactly who they are and what their business is.

This makes it easier for the customer service team to give customers personalised service and solve whatever problems they may have.

Expert view

South Africa’s foremost expert on the informal market, GG Alcock, told Daily Investor that he believes Capitec’s business banking model will be very successful. 

Alcock explained that many banks that attempt to penetrate the informal market do not make an effort to understand the market first.

He said one of the most important things companies need to get right when offering services to SMMEs in the emerging market is understanding the hybrid formality these businesses need.

“It’s the concept of formalising the things that are important and not formalising the things that actually make your business successful,” he explained.

For example, one important aspect to formalise is a business’s financials, including how it handles payments and manages its finances.

He said one big thing Capitec will need to get right to succeed is also recognising these emerging market businesses as businesses, which are often overlooked because they are not “traditional”.

For example, Alcock has done extensive research into what he has termed South Africa’s “backroom economy”, wherein thousands of people will rent out part of their homes, either for personal or commercial use.

Many people who do this make thousands each month, yet they are not recognised as business owners.

“By recognising those dynamics and then providing digital, electronic and other services, there is a massive opportunity there,” he said.

“I think most of the other banks – the more traditional banks – are not recognising informal businesses as businesses because they don’t realise how substantial these businesses are in terms of turnover.”

He said these businesses are often viewed as “survival businesses” and, therefore, not worthy of banking.

He believes Capitec gets this right, as the bank sees these businesses as worthy of banking, similarly to how it targeted underserved South Africans when it first launched in 2001.

“I think Capitec is dynamic, they’re trying to understand the people in that space, they have people on the ground, it’s unusual to see,” he said.

“It’s very unusual to see companies spend so much money to not only understand but also give their customers dignity and respect.”