Is Capitec really the most primary-used bank in SA?

Fin24 10:01 04/02/2017

Cape Town - A leading expert is challenging a study suggesting that Capitec Bank Holdings is the most-used primary bank in South Africa.

Consumer research group Nielsen found that Capitec Bank is also South Africa’s preferred and most-used primary bank.

The survey was commissioned by Capitec and polled 2 328 banking clients. Three out of 10 (29%) banking customers pointed to Capitec as their primary bank – 11 percentage points greater than FNB’s 18%. Absa tracked behind at 17%, followed by Standard Bank with 15% and Nedbank with 10%.

However, Petar Soldo, the founder and CEO of Digital Republic Consulting, who has over 12 years experience in conducting research for major banks, presents two arguments questioning the study results.

He writes:

The Capitec story is an amazing one and what they have achieved in slightly more than a decade is almost unbelievable. My comments in no way changes my opinion or perception of Capitec as a fantastic success in disrupting the South African banking system.

When I saw the overall market share numbers and the headline that Capitec was the largest primary transactional bank in South Africa, that did not to gel with more than a decade’s worth of deep experience and insights into the banking market.  The results of Capitec having 40% primary or main bank market share in the Western Cape also did not resonate as being an accurate reflection of reality. 

I will simplify my argument to a few points, although there are many more.

Before getting into the specifics, it is useful to state a few ground rules or areas that I won’t be delving into:

  1. There is a lot that can be said about sampling in general and the impact that the sample size has on the margin of error of the observed results. I don’t think it is necessary to discuss that at present, apart from saying that the margin of error for the Western Cape would be significantly larger than the overall national margin of error since the sample size in the Western Cape would have been a portion of the total 2 328 interviews conducted.
  2. The second point is that one cannot make any definitive calls around the methodology underpinning the research because that has not been disclosed.
  3. I have conducted research for all the banks including Capitec.

Argument 1:

The Capitec financials disclose that in August 2016 that it had 7.9 million customers of which it estimated that 46% (or 3.6 million) were primary banked customers.

 

Source: Capitec

If one looks at just one of the other banks that has disclosed detailed customer numbers (Nedbank from its 2016 Annual Report), you will see that it claims to have 7.3 million customers and 2.7 million primary banked customers.

 

Source: Nedbank

Most banks have similar methods in estimating whether or not a customer is a primary customer or not, and the most commonly used approach is to look at whether or not a salary is deposited into the account (and indeed the Nielsen research used that as a definition for primary banked customers).

If the Nielsen’s market share numbers are accurate, then Capitec has 29% of the market and Nedbank has 10%. So Capitec should have almost 3 times (300%) more primary banked customers than Nedbank.

Looking at the official disclosed number of primary banked customer by Capitec and Nedbank, we can see that Capitec only has ±33% more customers than Nedbank. So Capitec is larger than Nedbank by that measure, but not 300% larger.

That is a massive discrepancy. The question then is: do you trust the bank’s official numbers or the research results.

Argument 2

The results released in terms of the Nielsen research (presumably commissioned and paid for by Capitec), show some interesting differences when compared to the market share numbers released by Capitec in it’s September 2016 Annual Report.  These latter market share numbers are based on the AMPS study which is a much bigger research study.  Unfortunately the AMPS data stops at December 2015; however there are some interesting conclusions that can be drawn from a comparison of the two data sources.

One would expect to see a similar trend in the market share numbers given that both research projects are measuring the same thing.

 

  • Typically market share numbers, especially in the consumer space sum to 100%.  The vast majority of consumers only have one primary bank.  If we sum the Nielsen’s data (above) for 2016, we get 89%, so the question is where is the remaining 11%?  It can’t be “other banks” because the only other player in the market is Post Bank and if it had a significant market share, one would assume that that data would have been shown.  The other potential answers are respondents who refused or didn’t know or (less likely) stated that they had multiple accounts into which their salary was deposited.  The point is that without knowing what this missing 11% is, we cannot really correctly interpret what the 29% for Capitec represents.
  • The Nielsen data shows that Capitec lost market share (albeit marginally) from 2012 to 2013 (13% to 12%). The AMPS data shows a big increase in market share from 2012 to 2013 (10.8% to 14%).  Capitec’s own customer numbers (total and primary banked) also show very strong growth from 2012 to 2013 (1.1 million to 1.8 million primary customers).
  • The Nielsen numbers also show that FNB has been losing market share since 2012 (along with Absa) and almost all of those gains have gone to Capitec. Again this simply does not gel with my experience in the market.  FNB had a very successful Steve campaign during this period, as well as launching numerous successful initiatives such as a lower cost account, banking app, etc. 
  • Nielsen's research also mentioned that the results are weighted to represent the banked population of 22.9 million people.  This banked estimate appears to be based on the latest Finscope research conducted by the FinMark Trust (and excludes from the banked population SASSA card holders).  As indicated early, by definition a person typically only has one primary bank account. We should therefore be able to do a rough approximation of primary market share using the banked population and Capitec’s disclosed number of primary banked customers: 3.6m/22.9m = 15.7% (so barely half of the 29% result).  If the same calculation is done for Nedbank 2.7m/22.9m, one arrives at = 11.8% which is much closer to the Nedbank market share of 10% as per the Nielsen research.

*Petar Soldo is the founder and CEO of Digital Republic Consulting, a specialist analytics firm that focuses on: social intelligence, market research and data analytics. Soldo is an expert in banking market share research in South Africa, with more than 12 years experience in conducting such research products for the major banks in the country across all consumer and business markets.

How women use Social Media...

When looking at the types of Social Media women use, we refer to Facebook, Pinterest, Instagram, Twitter, Linkedin, Slashdot and Tumblr as the most popular social media platforms. When it comes to building relationships on Social media- women really know what they are doing.. Women tend to have more friends on Social Media platforms than men as they outnumber men on Facebook, Twitter, Instagram and Pinterest and more open to creating new friendships via social media. Social Media is a tool for women to either share their thoughts or for them to see what everyone else might be up to..

Some studies have shown that Women passwords more often than men to protect their devices, information and documents.. From analysing women’s profiles on all of the different Media Platforms you will see that they protect their reputation by activating Privacy settings on their accounts in order for others to see limited content where as men will be more open to sharing their personal details on the web and are not really too phased..  

Women also rarely use Facebook as a messaging device but mainly for Entertainment purposes such as looking at posts and sharing videos with their friends. When looking at the professional side of Social media use from Females, you can see that women don’t often use Social Media as a tool for work unless they occupy a job title that requires them to do so.

So judging from the information above As we all know, women are vocal, expressive and always willing to share and communicate especially if it is for entertainment  which brings us to the conclusion that women are biologically wired for social networking!!

 

Jenna Wands 

The death of Print Media

Print Media refers to paper publications circulated in the form of physical editions of books, magazines, journals and newsletters and it has shaped the way we think and has influenced our lives for a very long time. It’s pretty safe to say that people have learned a lot about the world through Print Media. The decline of Print Media has been widely debated as today’s industry faces an astronomical decline in Newspaper and Magazine sales as well as the loss of classified advertising and precipitous drops in circulation globally..

 

The sad news is that advertising portals such as Television, newspapers and magazines are all effected, offering further proof that traditional media may just be on its way out…  With so many different forms of media distribution, traditional print media is struggling to maintain readership and Print media companies are struggling to make ends meet as more and more people are starting to realise that the internet offers them the same content just a click away and without the inconvenience of sifting through pages. Although many people are not so certain about the death of Print Media but the facts are in Black and White when looking at sales statistics…

 

Over the past decade, we have seen an explosion in the amount of digital content and the capacity to transfer this data. In fact, there are currently three zettabytes of digital content in the world. A zettabyte is a trillion gigabytes of data. The amount of information will continue to double every 18-24 months along with faster pipes to carry this information. Even more astounding is the capacity of the internet to transfer data is now approaching one zettabyte.

 

In today’s age we are reading more than ever, our brains process thousands of words via text messages, email, games, social media, and web stories and that is all thanks to Technology.

 

So the real question is why would you want to go to a newsstand when you could read the same article in just one click?

 

~Jenna Wands

Media Monitoring Exposed...

Your brand name is your reputation. Nothing is more important – Richard Branson

 

More often than not, people don’t fully understand what we do when we say we are in media monitoring. Media Monitoring is so much more than just monitoring what is in the media.

 

Brand reputation management has become one of the most important facets of any business in today’s society and marketplace alike. Transparency has become inextricably linked to the concept of reputation management, we see this in consumer behaviour changes, communication improvements and technological advancements. In the ‘transparency tyranny’ the power of this trend is likely to unmask, outnumber and consequently neutralise the fake and desperate brands (http://trendwatching.com/trends/pdf/2007_05_transparency.pdf). Consumers today want AUTHENTIC brands, they want brands that are willing to own up to their mistakes. They want brands that are transparent!

 

Media Monitoring is not perfect, it’s a team effort between Client, their Agency and the Media Monitoring team behind the brand, it centres on the principle of what you put in, is ultimately, what you will get out. The only way to truly know your brand reputation in the marketplace is to LISTEN. Media monitoring is a means of doing this, but it doesn’t stop there. Strategically, brands need to take the gift of listening and knowledge, and then convert it into actionable business insights, essentially – taking the data and making it tangible.

 

Given technology and the rapid advancement thereof, one has to wonder why a business makes the conscious decision not to maximise the opportunity to interact directly with those who consume their brands, and more importantly, share those experiences with others in their communities and circles. Through media monitoring, one is able to successfully manage the consumer experience and foster positive brand associations. Media Monitoring has to go deeper than the simple collection and distribution of published media material, it should assist with informing a brands strategic direction and intent. Media Monitoring gives you the power to become an early adopter within your market place, it provides insight into what is happening in the macro and micro environments in which your brand operates.

 

Ultimately the power of the intelligence that media monitoring provides can enable a brand to move strategically in the direction of owning the product category and becoming best-of-breed. Yes, there are a whole host of other facets that will give you the power to ultimately reach this point and to maintain it, but media monitoring provides the foundation.

 

Without the intelligence and insight behind the data, and with poor methods of data collection, the data is essentially rendered useless. You cannot fix or create something you don’t know about. You know your brand and business better than anybody, by working hand in hand with a market intelligence agency, together this creates a formidable force that moves your brand from strength to strength.

 

All too often, brands don’t realise the value in media monitoring, and as Andrew Hutchinson rightfully states, the knowledge provided by media monitoring opens up new perspectives, it’s all about the value of knowing (https://blog.hootsuite.com/social-media-democratisation-media-monitoring/).

 

One has to ask oneself… what is the value of knowing?

 

Media Monitoring is more than just the collection and distribution of data, well, at least it should be! In a complex environment where the consumer is central to the success of any brand and its reputation, we think it’s safe to say that every company needs media monitoring!

 

The power of knowledge comes with responsibility. A brand can choose not to listen, but the impact of this decision is far reaching. We listen to your consumers and non-consumers so that we can assist you with not only breaking through the clutter, but fostering a brand love within your target market arena.

A World of Suppressed Media

To mark the 22nd anniversary of ‘World Press Freedom Day’, South African minister of communications, Faith Muthambi stated: “Media freedom is my right…media freedom is your right…media freedom is for all of us, therefore, all of us have a responsibility to defend media freedom and editorial independence from any form of compulsion, be it political, economic or commercial.” (http://mybroadband.co.za/news/government/163759-media-freedom-not-declining-in-south-africa-communications-minister.html).

 

On the 3rd May, we celebrated what’s known as “World Press Freedom Day”. The Declaration of Windhoek is a document compiled by newspaper journalists to promote an “independent and pluralistic African Press” towards the view that press freedom is crucial to democracy whilst remaining a definitive human right (http://allafrica.com/stories/201605031182.html).

 

The word ‘freedom’ implies the ability to do as one wants. However, this would essentially lead to a lawless society filled with chaos on all levels. In essence, freedom of speech doesn’t need to be banned or restricted in the official sense of both words, but those in power who want ultimate control, can and will easily render a country governed by laws, lawless. This control fosters a fear for the media. As you read this opinion, bear in mind that the ‘freedom’ mentioned has its definitive limitations, it comes in varying degrees particularly from a human construct perspective, and what those with the power to control ultimately do with it.

 

Taking a look at some stats briefly, according to the Press Freedom Index published by Reporters Without Boarders, the global indicator of this freedom has dropped by a significant 3.71% (https://en.wikipedia.org/wiki/Press_Freedom_Index), with Eritrea ranked as the worst in the world. Interestingly, this country’s constitution pledges freedom of speech and of the press (https://freedomhouse.org/report/freedom-press/2015/eritrea), but this is not applied in daily practice and in fact, the complete opposite is true. Furthermore, according to Elana Beiser (editorial director of the Committee to Protect Journalists), Eritrea continues to be the worst jailer of journalists in sub-Saharan Africa and the foulest abuser of due process (https://cpj.org/reports/2015/12/china-egypt-imprison-record-numbers-of-journalists-jail.php). Eritrea (and others) are basically an embodiment of how you can have laws in a society but that they are simply a means of control. In territories such as this, the law only matters if it serves those in power and when it doesn’t then it’s simply disregarded (http://sultanknish.blogspot.co.za/2012/06/lawless-society.html).

 

The United Nations’ 1948 ‘Universal Declaration of Human Rights’ goes on to state that "Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference, and impart information and ideas through any media regardless of frontiers" (https://en.wikipedia.org/wiki/Freedom_of_the_press).

 

The fact remains that there is still a profoundly troublesome deterioration in the respect for media freedom and what it REALLY means to have this freedom. According to Reporters Without Boarders, the global indicator of this freedom has gone from 3719 points 3857 points over the last year. This is a massive 3.71% deterioration, and looking at the decline since 2013, they report a massive 13.6% corrosion of media freedom! (https://rsf.org/en/deep-and-disturbing-decline-media-freedom).

 

In the constantly evolving media landscape, it is becoming incredibly important to value and uphold what is truly known as press freedom, and to understand what this genuinely means, alongside the power it yields. With the power to connect and divide, I am lucky to be able to say that as a media monitor, I get to watch this changing dynamic on a daily basis. Working in this industry, it is increasingly evident to me how companies shy away from transparency more and more. In his book “Trust me, I’m lying”, Ryan Holiday explains that today sites and blogs are removing one’s ability to monitor what is being said by removing RSS functionality, this allows for effortless deception and the almost complete obliteration of transparency.

 

I guess you could say that by default, as a media monitor, the level of my media consumption is almost amplified in a way. Each and every day I see the media manipulating and being manipulated. Obsession with power and ideology stemming from societal teachings and human ego are some of the very constructs that threaten independence and suffocate our right to be free thinking individuals, and hence our ability to have informed opinions. A pertinent quote from Lysander Spooner drives the thought home and tends to make one question the media more critically – “Those who are capable of tyranny are capable of perjury to sustain it.”

 

Freedom is not absolute, but is freedom an existential truth?

DDI Media Monitoring is live

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