With the head offices of South Africa’s big banks being in Johannesburg, Stellenbosch’s Techno Park, where Capitec started out in a modest office complex, appeared to be far from the action. But in the banking sector the front lines were not necessarily on thick carpets where generals sat behind mahogany desks. Banking was “guerrilla warfare”, says Gerrie Fourie, longtime operations boss and CEO since 2014.
Capitec decided to take on its competition in the platteland. This is where its microlending footprint — those 300 cash loan shops it bought with capital supplied by PSG Wealth — came in handy. Capitec’s roots were in the small towns that served as economic hubs for a large rural population. There it came across hundreds of thousands of potential clients the old giants — the likes of Absa, FNB, Standard Bank and Nedbank — might have wanted to target, but just did not know how to.
“If we had our head office in Johannesburg, I think we would have probably started out with an emphasis on Johannesburg — it’s just natural,” Capitec founder Michiel Le Roux reflected years later.
The banking bosses in Gauteng had a boxed-in way of thinking — “insular” was the word he used. “They think Johannesburg is everything. It’s a lot, but it is by no means everything.” So Capitec ignored the less glitzy areas, and that suited it just fine.
In the large cities, there was much more competition. Convincing those urban clients to move to a new bank would have been a big challenge, but in the more rural parts of the country it was easier. Capitec’s “acquisitions” team had explored all corners of the country when looking for those cash-loan shops to buy. In the process, they pressed a footprint deep into the fertile soil in the heart of the country.
The branch network certainly leant more towards towns and townships than the shiny new business hubs or the tidy shopping centres of suburbia
The microlenders were not simply bought and left to their own devices. Remember, Capitec wanted the clients more than the actual sites. The team then examined these shops in more detail to see how suitable they would be as microlenders or bank branches. And there were some strange sites. One was a butchery-turned-lender — and the butcher’s block was still there!
In the beginning, recalls business development head André Olivier, the team — not only middle management, but also the big bosses — travelled far and wide to determine the location of the local taxi rank, as well as the Pep Store and Shoprite. “There is no other CEO of any institution who visited as many branches as Riaan (Stassen, CEO until 2014) and Gerrie (Fourie, current CEO),” Olivier says.
Fourie believes he, first as head of operations and later as CEO, signed off on the opening of the first 600 or 650 branches, after first walking the area and deciding whether he was satisfied with the location.
Their approach was scientific. Modes of transport — be they buses, minibus taxis or trains — were incredibly important to the clients Capitec was after, Stassen reflected later. That is why they conducted research to determine where a branch would be best located. Despite branches being standardised in terms of appearance, slight adjustments were made at specific sites to make things easier for clients and banking personnel — and, of course, to allow things to move more quickly.
“Branch visits gave us time to mull things over and debate among ourselves,” explains Stassen. “In the evenings, we’d share a bottle of good wine or three. And the next morning Gerrie and I would go for a run.”
Naturally, it wasn’t just the two of them who had debates. In a way, the bank’s management team in the early years worked less like a military unit and more like a detective squad in a police drama. Stassen and marketing guru Carl Fischer wanted things to happen — they wanted to put services on the market and ensure the client had the best experience (much like officers urgently wanting to handcuff and lock up a crook). Christian van Schalkwyk would dig in his heels because, as the head of risk, he had to ensure they followed the right procedures and rules (that cop who does everything by the book).
On another day, the systems guys Chris Oosthuizen and Olivier would question the bank’s capacity to handle new initiatives (the forensic team that lets you know when this piece of evidence doesn’t match the rest). And, as finance chief, André du Plessis was in charge of firepower (he knew how much ammo the bank had). Obviously, a group of guys in their late thirties and forties could get into some lively arguments. Fischer calls it “the balance between helicopter pilots and technocrats” — one a necessary counterweight to the other in such a high-risk industry.
Back to branch visits. Withdrawing cash was popular right next to a taxi rank. On their way home, commuters wanted money to do more shopping or spend later. By this time, they often already had bags of groceries they did not want to carry around for too long, so chances were they had an appetite for only a quick transaction.
But a branch more focused on loans did better if it was a few blocks from the hustle and bustle of a transport node — and preferably between retailers, where a client could sit down and speak to a consultant without the day’s shopping and other baggage under an arm.
Sites close to clothing retailers were especially good spots, as loans were useful when it came to buying school uniforms or other essentials.
The branch network certainly leant more towards towns and townships than the shiny new business hubs or the tidy shopping centres of suburbia. By 2005, Capitec had no branches in Sandton, but four in Polokwane. Though there were seven in downtown Johannesburg, Soweto also had four. Springbok had one, as did Lusikisiki.
Like a blanket, Capitec spread all over, covering places the old big four banks couldn’t or wouldn’t.
