Capitec under siege by OM Bank and Pep Bank
Capitec under siege by OM Bank and Pep Bank, as two formidable new entrants launch aggressive strategies to capture the low-to-middle income market that has long been the stronghold of South Africa’s largest digital bank. The banking landscape is shifting rapidly, with retail giant Pepkor and insurance titan Old Mutual leveraging their massive existing footprints to challenge Capitec’s dominance directly.
This intensified competition comes at a critical time for the South African banking sector, where the battle for the “mass market” is moving beyond simple access to banking and towards value-added services and zero-fee structures.
Pep Bank: The Retail Giant Awakes
This week, reports confirmed that Pepkor is in advanced talks to partner with Investec to launch a new banking offering. Informally dubbed “Pep Bank,” this venture poses a unique threat because of its sheer physical scale.
Pepkor is not building a bank from scratch; it is activating a sleeper network. The retailer plans to utilize its 6,000-store network—which includes household names like PEP, Ackermans, and Tekkie Town—to roll out accessible banking points overnight. This infrastructure dwarfs the branch networks of traditional banks, including Capitec.
The strategy focuses on:
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Zero-Fee Services: Aiming to undercut competitors by removing transactional fees, a direct challenge to the low-cost model that made Capitec famous.
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Investec Partnership: While Pepkor brings the distribution, Investec brings the banking license and technical expertise. This allows Investec, typically focused on high-net-worth individuals, to access the mass market without diluting its premium brand.
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Data Usage: Using vast retail data on customer spending habits to tailor credit and financial products specifically for lower-income households.
OM Bank: The Insurance Powerhouse
Simultaneously, OM Bank is ramping up its assault. Led by CEO Clarence Nethengwe, Old Mutual’s new banking arm is not waiting for organic growth; it is converting its massive insurance client base into banking customers.
OM Bank has revealed that it is already onboarding approximately 5,000 customers a day. The bank’s strategy is built on the “power of the ecosystem,” leveraging Old Mutual’s Mass and Foundation insurance cluster, which houses over seven million existing clients.
“We are not focusing on an unfamiliar client base; we already know the individuals we are targeting through the insurance business,” Nethengwe explained to investors.
By offering a unique combination of insurance and banking products, OM Bank aims to reach 2.8 million active clients by the 2028 financial year. The bank is positioning its app as a central hub for financial wellness, generating significantly more interactions per client than standalone insurance apps.
The Battle for the Mass Market
Capitec has long been the undisputed king of affordable banking in South Africa, currently serving over 22 million clients. Its explosive growth was fueled by a simple philosophy: one account, affordable fees, and extended branch hours.
However, the entry of Pep Bank and OM Bank changes the equation. These are not fintech startups struggling for brand recognition; they are established titans with deep pockets and trusted brand names.
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Convenience: Pep Bank can offer banking services where customers already shop, eliminating the need for a separate trip to a bank branch.
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Trust: Old Mutual has been a trusted financial brand in South Africa for over a century, reducing the friction of trust that usually hampers new banks.
Capitec is responding by evolving. The bank is increasingly moving into the “value-added services” space, selling airtime, electricity, and even negotiating exclusive retail discounts for its clients. It is also pushing into the business banking and higher-income segments to diversify its revenue streams beyond entry-level banking fees.
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Analyst Perspectives
Market analysts have noted that while Capitec remains a “market favorite” with a high valuation, it faces undeniable headwinds. The “Capitec playbook”—offering simple, low-cost banking to the unbanked—is now being copied and refined by competitors who have lower infrastructure costs or different profit drivers (like retail sales or insurance premiums).
Jean Pierre Verster of Protea Capital Management has previously noted the high valuation of Capitec compared to traditional banks, suggesting that the market has priced in continued perfection. With Capitec under siege by OM Bank and Pep Bank, maintaining that perfect growth trajectory will require fending off arguably the toughest competition the bank has ever faced.
The winners in this war will undoubtedly be South African consumers. As OM Bank, Pep Bank, and Capitec fight for market share, fees are likely to drop, and service levels are likely to rise, ushering in a new era of accessible financial services for all.
Here are two references from mainstream South African media that align with the details in the article:
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BusinessTech
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Headline: Capitec under siege
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Date: November 19, 2025
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Link: https://businesstech.co.za/news/banking/843820/capitec-under-siege/
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Moneyweb
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Headline: Pepkor plans to partner with Investec to offer zero-fee banking
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Date: November 18, 2025
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