VENTURES: Innovation is the Key
Recent Western Cape Business News
It takes innovation and the ability to see opportunity in creating a non-traditional alternative to build this into a successful business in a hostile environment.
This is according to Riaan Stassen, CEO of successful niche market Capitec Bank who was speaking at the Black Management Forum breakfast in Cape Town on Friday. In his keynote address to the Forum, Stassen outlined the thinking behind establishing the highly successful Capitec Bank as a start-up business.
“Capitec Bank was founded largely on the premise that most clients hate their banks – or aspects of them. Traditional banks have very complex offerings – including many different account options, fee structures and interest rate options. It’s a minefield trying to work out which option suits you best. But the biggest problems most people have with their bank are that the branches are never open when you can actually get to them; talking to anyone is difficult behind all those glass partitions; they are expensive, charging very high bank charges; and getting anything done – accounts opened, credit approved or a new card – takes time. Very rarely do you walk into a bank wanting something done, and walk out with what you need.
“So based on this understanding of the traditional banking environment, we saw a great opportunity, and then set out to create a non-traditional alternative to banking. Our basic premise was that our bank must be the most affordable, accessible and simplified with personal service. And that’s what we did.”
Stassen together with six current executives started Capitec Bank in March 2001.
“The environment for new start-up banks was hostile to say the least,” says Stassen. “To obtain a banking licence, conforming to industry requirements and minimum requirements for interbank payment systems was very challenging.
“And then, to make matters worse, the small banks crisis of 2002 saw small banks such as Saambou and its subsidiary 20twenty come crashing down, making consumers and businesses nervous about young, challenger banking brands.”
Stassen said that developing the business model was the most critical part of the company’s success. “We identified four key areas of focus – our unique product offer, the technology we would use, our distribution network and our people. In all these areas we had to innovate, to do something different – something that would make sense to potential clients,” said Stassen.
When it comes to products, Capitec Bank offers just the all-in-one “Global One Banking Facility”, which offers a savings plan platform, a transaction account for purchases, transfers, debit and stop orders, and a range of unsecured loan option. It’s card-based, simplified, easy to access – it takes 10 minutes to open an account and clients don’t have to fill in a single form – and it’s the most affordable banking available. Capitec Bank’s fees are less than half of what other banks charge and clients can earn highly competitive interest rates on savings balances.
Capitec Bank’s technology platform is a cornerstone of the business. It features completely paperless account applications, and no forms are needed for deposits, withdrawals or transfers. Clients only need their card and PIN to transact. In branches, there is no back office and no cash kept behind the counters, which enables employees to sit across the desk from clients and engage with them, with no glass partitions or security barriers. Biometric control and photographic verification ensures that no one else can access your account in the branch. This system provides fast, highly accessible, secure and easy-to-operate banking. All products are delivered in realtime, making account applications, approvals and access instant.
For distribution, Capitec Bank has a nationwide network of more than 350 branches and over 700 ATMs. The longest banking hours enable clients to actually get to a branch to transact, and branches often stay open even later at month-end to accommodate clients. Capitec Bank also developed a mobile banking service for opening bank accounts onsite at employers’ premises. The mobile units use wireless transmission, biometric verification of transactions and a digital camera to capture information and images of new clients.
Additionally, connection to the Saswitch network gives clients access to all other banks’ ATMs, and agreements with the big retailers also enable clients to make cash withdrawals at the unrivalled low cost of only R1 per transaction.
Finally, Capitec Bank invests substantially in training and developing its people. Employees are often recruited from the areas where they will work in a branch, ensuring a good cultural alignment. They are recruited for their potential, and then trained to develop the necessary skills.
Stassen said that the results to date have shown that the approach has found favour with clients. “We’ve grown our active clients from 400 000 in 2004 to 1.6 million in August of this year. We now have over 350 branches, 870 ATMs, 3 190 employees and have shown consistent earnings growth in excess of 30 percent every year since 2004.”
So what are the lessons for business owners? “Identify the opportunity where others only see constraints, work smarter and more efficiently, and most importantly, provide your clients with what they want. If you have a unique positioning, a unique product or a unique way of offering a service, then you’re already on the right path.”
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