Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers
(11 pages of text)
Capitec Bank was a new bank established at the end of apartheid to offer banking services and loans to the large numbers of low-income potential customers newly opened to economic progress and aspiration by the end of the discriminatory system. The banking context was dominated by four major and long-established banks characterized by conservative legacy practices. Capitec planned to create an innovative offering to serve the low-income market and to migrate this offering into higher income groups. At the same time, the competitive context began to change, as other banks sought to attract lower-income clients as well. The case examines Capitec’s strategic options for survival and expansion in this context.
The case will be useful for postgraduate MBA courses and short courses focused on a key challenge of doing business at the so-called “base of the pyramid”: how successfully can an enterprise in a changing competitive climate both continue to consolidate and develop its low-income market, while at the same time diversifying its reach into higher-income banking markets? The case can be taught from the perspective of engineering a product for a low-income market or innovating in a context dominated by legacy players. It also provides insight into the market context for innovation in a middle-income country such as South Africa.
Finance and Insurance
South Africa, Medium, 2012
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