Banking and Major Banks

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CAPITEC CASE STUDY

1.What resources and capabilities made Capitec successful?
-Firstly, the gentlemen that founded Capitec came from strong financial and micro-lending backgrounds. Jannie Mouton was chairman of PSG Financial Group, Michiel Le Roux former head of NBS Boland Bank along with Riaan Stassen and Fischer. These men had a superior knowledge of the banking industry and understood the banking system so that they may cut costs for the end-user and still make a profit for the organization. -With this in mind Capitec was originally well capitalized with R350 million which become worth R2.2 Billion, showing 23% return on equity in 2006. -Capitec had a good strategy of changing the consumer’s perceptions from thinking it was only a micro-lender to one that had real-time delivery, simplicity through paperless card driven processing and personal contact. A sound business model was developed of four key pillars: - Affordability, Accessibility, Simplicity and Personal service. -Using these four pillars Capitec was able to ‘slash banking fees by half to that of their competitors”. Simple things like using cashless transactions meant they saved money on security by not having to install bullet-proof glass and less risk of armed robberies. Costs were saved by only having one ATM at each branch and these branches were located where every day, working customers could quickly stop and do their banking after work or in a lunch break (operating hours 8am-5pm, long than normal banks). -The alliance with Shoprite Checkers and Pick n Pay, where clients could withdraw cash was also beneficial as less ATM needed to be installed. -Later on when Capitec introduced mobile banking in 2006 this allowed more workers to open a bank account and helped grow Capitec client-base.

2.As some of the customers become affluent and demand more sophisticated products such as mortgage loans, should Capitec increase its product range? I would say no, not at this stage. Maybe they...
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