Banking (P)review 6: Capitec’s New Competition

Originally published on LinkedIn, February 19, 2026

“Imitation is the sincerest form of flattery”

(This note is the last in the series!)

1. Introduction

It feels like forever that Capitec has been the upstart eating the incumbents’ lunch. That landscape is changing.

Just as banks look at “adjacent” services/products/industries for new growth vectors, the self-same adjacent players are looking back across the neighbouring fence. So too are new entrants with new technologies and models. Given historical performance and the relative size of the profit pools, banking looks super attractive. In order to optimise ones own prospects, it makes sense to hint at emulating or competing with Capitec. The potential “halo” gains to market value or funding valuations are massive.

So it is that never have the unbanked, underbanked, financially excluded and mass-middle market, prospectively had it so good. Retailers, telcos, fintechs, neobanks, and Insurers are leaning in. Individually, one might harbour reservations, but taken together, some will succeed. This note covers the most promising: Pep Bank, Shoprite, Lesaka, GoTyme and Old Mutual Bank.

2. Pep Bank

The déjà vu or irony award goes to Pepkor, which in November 2025, received permission from the Prudential authority to launch “Pep Bank” (aiming to receive its actual Banking licence by the end of this year). Not only did Capitec historically pay a deferential nod to Pep stores with its original branch placement strategy, but inaugural CEO, Michiel le Roux, actually started the original short-lived Pep Bank in the mid 1990s.

In the latest financial year (Sept 25) Pepkor’s “Fintech” segment increased revenue by 31% to R16.6b and profit by 52% to R2.2b. They have 3.5m store card revolving credit facilities in place (+1.3m in the year), and credit sales made up 13% of Pepkor’s sales. This is much lower than Truworths (closer to 50%) suggesting significant headroom. In addition, they have 170k proprietary Flash machines functioning as POS devices, a 6000+ store national footprint, and the money-spinner that is the FoneYam mobile handset “rental” offering with 2.3m customers at the end of December.

These are impressive numbers. It means that they are launching a bank with 5.8m customers already on their books and profitable. As a final tick, Pep’s dual-track approach to becoming a fully-fledged bank — building its own stack on the Cloudbadger platform on the one hand, whilst leveraging both Investec’s plumbing to the National Payment system, and Investec’s Balance Sheet in the interim first years demonstrates enviable pragmatism!

3. Shoprite

Shoprite is the second of the retailers showing promise. It has emerged by stealth! They started out using financial services to drive foot traffic by offering tills as proxy-ATMs. Now that 2,500+ store footprint is starting to look like a de facto branch network. The “invisible bank” has been built on the Shoprite Money Market Account which has quietly scaled to 4 million active users. A serious contender!

Shoprite has three seriously compelling differentiators: it is a zero fee account, a transactional account disguised as a money market account, and it offers no debit order capabilities. The last seems bizarre but is brilliant in context. It is a “safe haven” feature that offers low-income earners and SASSA grant recipients protection from sometimes predatory automated deductions that will have scarred many. To date, Shoprite have avoided the capital requirements of a full banking licence by partnering with African Bank — a white labelling agreement.

The bottom-line is that 4 million deposit/transactional accounts is a massive loss to all other actors of “main banked” accounts. And that number will keep growing, especially if Shoprite becomes more aggressive in its focus on financial services. It feels like a matter of time before Shoprite considers disintermediating African Bank.

4. Lesaka

Lesaka’s emergence as a “Frankenstein” assemblage of parts also represents a potential headwind to Capitec but in a different space. With respect to business banking, Kazang has 90,000 active devices, mostly in informal/spaza shops which gives them sighting on the cash economy that even Capitec misses. Adumo (used by 23,000 merchants) moves Lesaka up the value chain from spaza shops to mid-tier retailers, which is where Capitec Business is trying to grow. Finally, providing there are no hiccups with the formalisation of the digital-only Bank Zero acquisition, Lesaka might be able to raise retail deposits (cheap money) to fund merchant loans (high yield).

Simply, Lesaka is in a race to prove that the whole can be coordinated to be worth more than the sum of parts. Operational alignment is difficult but navigable. One worries that its Balance Sheet may not stand up to a Black Swan event. My first piece of strategic advice to any Bank in these extraordinary times would be to have a “fortress balance sheet”.

5. GoTyme Bank

GoTyme (the zero-monthly-fee digital bank) has more than 12 million customers in South Africa (and 20 million globally). This is super impressive. Their physical reach via thousands of kiosks in TFG-Jet/Foschini, Pick n Pay & Boxer stores has provided a hybrid “phygital” presence that pure digital banks lack and has been key to growing customer numbers.

That said, one might reasonably infer that the phygital model has been experiencing growth pains. The GoTyme App is highly rated for its UI/UX on both the Apple and Google stores. The “human-in-the-loop” resolution processes have been a cause of friction though, with it having a rating of 1.9 on a 5 point scale on Trustpilot. This is to be expected given rapid growth, but not excused if it is to be successful.

Tyme’s prominent backers — Sanlam, ARC and Nubank — are a significant endorsement. Nubank’s $150m lead investment has given Tyme a VIP pass to the world’s most successful digital credit-scoring playbook. Sanlam’s 25% stake (in ARC) is proving to be a masterstroke of ‘low-ego’ strategy, turning GoTyme into a high-speed distribution engine for Sanlam’s insurance and wealth products.

For Capitec, the threat is no longer just a cheaper banking alternative; it’s an integrated financial ecosystem backed by the world’s largest digital bank and South Africa’s largest insurer.

6. Old Mutual Bank

Full disclosure, I find the origin story of OM Bank perplexing, vexatious even. A Bancassurance giant decides to unlock value by unbundling to allow the component parts to focus. Common practice! The biggest parts are already listed. The first thing the newly focused Insurance business does is announce it is going to start a bank. Raise eyebrows! But it’s a low cost digital bank. Ah! But it’s going to have lots of branches. Raise eyebrows! And it’s going to target the mass-middle market with the most viciously competent and cost effective incumbent, Capitec. Raise eyebrows!

My perplexity aside, none of the above is relevant when looking forward, sunk costs and all that! To break even OMB needs 2.8m customers, targeted for 2028. Of these, 1.7m are intended to come from their existing “Money Account” base and the broader Old Mutual ecosystem. Over 140k customers have been onboarded to the new bank already. Getting the “migration” right might in itself be seen as a defensive victory. Capitec has been aggressively eating Old Mutual’s lunch in the funeral and credit-life space. By deepening the relationship with the customers, Life customers are protected too.

7. Summation

The above is not nearly exhaustive — every man and his fintech dog is wanting to disintermediate some part of the banking value chain. And in fairness, the Legacy 4 are not quite as unresponsive and moribund as they are sometimes made out to be.

Should Capitec be worried? Yes and No!

The biggest players (Pep = 5.8m customers; Shoprite = 4m customers, GoTyme = 12m customers) have been in existence for several years now and this has not detracted from Capitec’s performance.

But the Legacy Big 4 probably felt like this at the outset when Capitec emerged on the scene. And by the time they realised the threat it was too late. The “noobs” have compelling offerings. And the pace of technological advances raise the prospect of even more competition.

The flipside of the coin is that competing in the mass-middle market with an entrenched low cost incumbent already at scale, is going to be bloody difficult. A parting word of advice for new entrants: don’t go too crazy with unsecured lending. You cannot win in the long term if the first market squeeze kills you. Ask African Bank!