Capitec: 20 years of breaking the mould

Twenty years ago it was dismissed as a ‘fly-by-night’. Today Capitec is the largest digital bank and the largest bank by active banking clients in South Africa. 

Capitec’s sleek headquarters evoke the curves of the bank’s logo. Pictures by Bruce Tuck/SUPPLIED

As Capitec’s sleek new head office celebrates the beginning of a new era, the current team under the leadership of CEO Gerrie Fourie is keen to advance to new frontiers, while jealously guarding the distinct culture of the company.

André du Plessis, Capitec’s CFO since its inception, described this culture in a recent interview with CFO Magazine: “We wanted to create a family environment where people feel safe to try things and make mistakes. At the same time, we wanted a culture of accountability and brutal honesty.”

The founders of Capitec never regarded themselves as corporate managers or bankers. They saw themselves as entrepreneurs, adventurers, even. “What we did was new and it was scary,” André admits. That did not deter them.

Three members of Capitec’s executive team have been there from the start: André du Plessis, Chief Financial Officer; Henk Lourens, Executive: Retail and Gerrie Fourie, CEO.

Besides André, all the members of the new bank’s ‘dream team’ (dubbed so by staff) had first made their mark in the liquor business before moving on to banking. Like Michiel le Roux, the first CEO, Riaan Stassen, who succeeded him, had been at Distillers Corporation (now Distell) at the time of Dr Anton Rupert. They knew how to cater to clients, and especially those who did not have access to banking at the time. 

Besides André, all the members of the new bank’s ‘dream team’ (dubbed so by staff) had first made their mark in the liquor business before moving on to banking. Like Michiel le Roux, the first CEO, Riaan Stassen, who succeeded him, had been at Distillers Corporation (now Distell) at the time of Dr Anton Rupert. They knew how to cater to clients, and especially those who did not have access to banking at the time. 

Rounding out the founding team for the bank-to-be were microlender Keymatrix’s MD, Gerrie Fourie – another Distell man – and Henk Lourens, its head of acquisitions. Today, the remaining three founders hold the reins: Gerrie as the CEO, André as CFO and Henk as executive for retail banking. 

As it celebrates its 20th birthday, Capitec can lay claim to a variety of ‘fathers’. There was Jannie Mouton’s PSG, which first saw the opportunities offered by microlending, held a bankrupt bank’s banking licence and had cash. There was also Keymatrix, a PSG subsidiary, which bought out cash loan shops to create a network of branches. And then, of course, there were the visionaries who had dreams about a different bank with different ways. 

Michiel was the one who brought everyone together, André says. Looking back, he sums it all up: “Without the management skills of the executives, the knowledge and know-how of the bankers, the strategic skills of the planners, the faith of the funders in the doers, the hard work and life dedication of the employees and the income from the unsustainable microlending business, we could never have achieved what we have created.” 

A ‘tjoppie’ for a vegetarian

When Michiel le Roux’s plans to build a bank were underway but for the lack of senior management and a banking system, he received a call in early 2000 that was music to his ears. The entire senior management he had worked with at Boland Bank, he was told, were leaving and interested in joining him. When the negotiations were finally over and the deal put to bed, celebrations were in order. 

Michiel remembers the evening. “We were all at my house, André du Plessis and Carl Fischer, Riaan Stassen and Christian van Schalkwyk (André Olivier and Chris Oosthuizen joined a few months later) and I called Jannie Mouton and Chris Otto to come and braai with us. But when I went into the kitchen, all I could find was frozen meat. No bread, not a salad leaf, not a single tomato. So we had wine and braaivleis and only afterwards I learnt André Dup was vegetarian.” 

The next level

When Gerrie took over as CEO in 2014, there were massive expectations that he would take the business to the next level. He did that, and more. He steered the company through significant crises, not least American short seller Viceroy Research’s onslaught in 2018 and the 2020 Covid-19 pandemic. 

The Viceroy Report hit them hard, André recalls. “Of all the unpleasant happenings we had to weather over the past 20 years, that was the lowest point. For 18 years we had given our all to building an organisation with high moral values and to make a massive impact on the lives of all South Africans. Our ultimate aim was to create full inclusion for all in the financial markets, which, for many reasons, had not been the case before the establishment of Capitec. Our running of the business is structured to be honest, to have good corporate governance and to live what we set out to do through deeds, communication and delivery.

“Viceroy came out of nowhere and accused us of wrongdoing, being dishonest, ripping off clients and misleading investors; in short, ridiculing our values. They even attacked us personally. We worked day-in and day-out to clear our name and to ensure Capitec continues to deliver and improve the financial lives of our clients.

Michiel le Roux was the one to first spot the opportunities in microlending and a retail bank that offers banking to all South Africans.

“The similarity between Viceroy and Covid-19 is that both came from nowhere, of no wrongdoing by ourselves. Viceroy was an attack that required time, management and action, but caused no real long-term damage. Covid-19, on the contrary, brought real hardship to clients and loss to the bank.” 

Temporarily closing the entire head office, call centres and 50% of the branches would previously have been unthinkable. When the direction in which the world was heading became clear, the leadership’s natural survival instinct as entrepreneurs kicked in and they started preparing.

With the release of the latest annual report, the bank could report a total of 8.6 million digital clients as of the end of February 2021 and a 35% increase in the number of digital transactions to 1.1 billion, confirming its leadership in the country’s digital banking race. Capitec had started prioritising digitalisation long before the pandemic hit. “The advantage of Level 5 lockdown was to recondition us about the way we do things. Online shopping, using digital methods to carry out banking as well as other transactions, optimising the use of smartphones, notepads and computers have all increased and improved since then,” André says. 

Then CEO Riaan Stassen had sparked the idea by saying Capitec needed to take banking to the customer’s workplace.

Twenty years ago Capitec started as a small, insignificant bank with large dreams, principles and plans. The bank is now important to many clients, but its leaders are also hungry to do more. In October 2019, the South African Minister of Finance and other regulatory authorities formally approved Capitec’s purchase and acquisition of Mercantile Business Bank and on 7 November, Capitec bought all Mercantile Bank Ltd’s shares. In the newly created structure, Mercantile handles the ongoing clients, while the new Capitec business bank model concentrates on building something fresh and digital. 

André, in visualising the future, says, “I believe we have very smart people in the organisation and everyone who left has been replaced by people who have taken the organisation further – in some cases, to an even higher level. Teamwork becomes a lot easier if all the members have the skills and competence to perform their tasks.

‘You will never, ever make it’

When Capitec listed on the JSE on 18 September 2002, only nine days after the collapse of Saambou Bank, the outcome was dismal. The share price of the bank – a newcomer and a microlender to boot – was valued at about R5 per share at the time of listing, expected to open at R3 but opened at R2.75, then plummeted to an all-time low of R0.80 a share. 

“In the wake of that, one of the leading fund managers in South Africa, Kokkie Kooyman, told Michiel and me that we would never, ever, ever make it,” André says. “And when Kokkie speaks, everybody listens. So we did everything, I mean, we almost pawned our wives and children to get our hands on cash to buy shares.” 

Today, Kokkie is one of the most informed analysts on Capitec’s business and a regular commentator on the business.

Trust in teamwork

“As we hand over the reins, however, we have to ensure we are keeping our culture intact. That is critical. We may think we have arrived but we haven’t. We still need to deliver on our mission to become the financial friend of all South Africans and the best bank in the world.” The team knows that to accomplish this they need to make it possible to do transactions anywhere, at any time, to anyone. 

The reality, however, is daunting. The situation in South Africa includes unemployment, lower salaries, retrenchments and unaffordable loan repayments. To this can be added rampant corruption, the theft and blatant dishonesty in government and some private entities, money stolen from the poor. The current financial landscape is indeed hugely challenging.

“As any adventurer will tell you, tackling a new challenge is about teamwork and planning and realising beforehand that things can, and will, go wrong,” André says. “The advantage we had then was that no one saw us coming. That’s not the case any more. If we try something new now, we have one chance and one chance only.” As their good performance shows, they know how to steer clear of the ‘Bermuda Triangle’ – the risk department’s nickname for arrogance, complacency and ignorance.

At Capitec the adventurer bankers haven’t lost their taste for adventure or their trust in teamwork. 

South Africans will be the richer for it.

Wild West era of microlending: Werner du Plessis, ‘midwife’ to PSG’s first venture into microlending, which eventually became Keymatrix, then Capitec, told of a roadshow he and André undertook to market Capitec to the big banks. “One of the managers looked at us like the cat had dragged us in and said, ‘You’re just a bunch of loan sharks. We’ll purge the industry of the likes of you,’ and the next, waiting for us on the steps of his bank, ‘Do you know there’s a warrant out for your arrest?’”

This article is based on an interview with André du Plessis by Elmari Rautenbach for an upcoming book about the success story of Capitec. The next issue of Stellenbosch Visio will feature an interview with CEO Gerrie Fourie.