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How Capitec overcame high barriers to entry in SA

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Johannesburg - The South African retail banking sector is characterised by high barriers to entry. The sector is concentrated, with four of the largest banks – Standard Bank, Absa, First National Bank and Nedbank – accounting for more than 80% of retail deposits. Some of the small players have been operating for some decades – Grindrod since 1994 and uBank since 1975 – but their deposits have not grown significantly. Few banks have successfully entered the banking sector since the establishment of Absa 25 years ago.

The only successful new entrant into the local market has been Capitec.

Capitec was formed in 1997 through the acquisition of micro-lending businesses such as Smartfin and Finaid by the founding entity, PSG, an independent financial services group. It then registered as a bank in 2001.

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