Capitec Bank Case Study

Write-Up: Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers

Question 1: Where did the Capitec management team find the idea of founding a new bank, and specifically the type of bank it created?

Le Roux and Stassen (Capitec CEO) both came with extensive experience from the liquor industry where they honed their understanding of working with township people and learned a great deal about the customer behavior of the low income market. They understood the importance of cash-based transaction during this experience in the liquor industry. Their experience of knowing your customer needs and adapting to make those offerings were translated to experience to the banking industry.

Previous micro-loan banks did not understand the customer base from the perspective that Le Roux and Stassessen had learned to understand it from their liquor industry experience and Capitec was formed with closing this gap and offering services with the customer’s needs in mind. They also intended to highly leverage technology so as to make the process more efficient and be able to pass those savings to the customers.

Question 2: How do the actions of Capitec relate to insight about innovating under conditions of resource scarcity and the so-called base of the pyramid? Highlight the actions Capitec took to minimize the considerable uncertainty associated with launching a new bank, and specifically how frugal engineering it used?

The strategy behind the innovative launch of Capitec was to focus on four principles: affordability, accessibility, convenience and simplicity. To keep cost low, Capitec initiated with a limited range of financial services of basic transactions and small term loans with low fees and lower interest rates. The approach rested on lower margin but higher volume business strategy. The risk was reduced by spreading the deposit base via small loans short term loans.

They relied on a process that was paperless for their...