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.