Capitec Strategy to success
Capitec Bank:
The implementation of a successful Bottom of the Pyramid Strategy.
Introduction
History shows that the South African banking sector has predominately focused on middle to upper class income groups in the market, whilst neglecting the needs and demands of low income groups (Manson, 2012). Capitec Bank on the other hand, focused on the needs of these low income groups, creating a business model that was specifically tailored to their needs. Capitec was introduced in the banking industry during a time of crisis, Saambou Bank, which focused in micro lending had collapsed (McNulty, 2009). However Capitec has managed to endure this predicament and since its inception, has emerged as a force to be reckoned with, in a relatively short period of time. The bank has managed to penetrate the South African banking sector with progression in a matter of a few years due to its implementation of the inventive Bottom of the Pyramid (BoP) strategy aimed at targeting the lower end consumers (van Themaat et al, 2013). It is therefore essential to evaluate the BoP strategy, along with all of its aspects. For this reason, this essay will examine the history of Capitec Bank and in particular outline the successful adaption of the BoP strategy as well as its growth and current position in the banking sector. However, the main objective that will be discussed in detail will be on the aspects of Capitec’s strategy crucial for leverage in its position in the South African banking sector.
History
Capitec Bank was founded on the 1st of March 2001 and built back on its micro credit business, keeping in mind its intention to establish a proper bank in the microfinancing platform (Manson, 2012). Microfinance is a term used to describe the provision of financial services in addition to microcredit to small businesses and the bottom of the pyramid (BoP) population (van Themaat et al, 2013). Initially, Capitec started as a 300-branch micro-loan business with the
The implementation of a successful Bottom of the Pyramid Strategy.
Introduction
History shows that the South African banking sector has predominately focused on middle to upper class income groups in the market, whilst neglecting the needs and demands of low income groups (Manson, 2012). Capitec Bank on the other hand, focused on the needs of these low income groups, creating a business model that was specifically tailored to their needs. Capitec was introduced in the banking industry during a time of crisis, Saambou Bank, which focused in micro lending had collapsed (McNulty, 2009). However Capitec has managed to endure this predicament and since its inception, has emerged as a force to be reckoned with, in a relatively short period of time. The bank has managed to penetrate the South African banking sector with progression in a matter of a few years due to its implementation of the inventive Bottom of the Pyramid (BoP) strategy aimed at targeting the lower end consumers (van Themaat et al, 2013). It is therefore essential to evaluate the BoP strategy, along with all of its aspects. For this reason, this essay will examine the history of Capitec Bank and in particular outline the successful adaption of the BoP strategy as well as its growth and current position in the banking sector. However, the main objective that will be discussed in detail will be on the aspects of Capitec’s strategy crucial for leverage in its position in the South African banking sector.
History
Capitec Bank was founded on the 1st of March 2001 and built back on its micro credit business, keeping in mind its intention to establish a proper bank in the microfinancing platform (Manson, 2012). Microfinance is a term used to describe the provision of financial services in addition to microcredit to small businesses and the bottom of the pyramid (BoP) population (van Themaat et al, 2013). Initially, Capitec started as a 300-branch micro-loan business with the