By keeping their insights clear in each advertisement will help build a name for the brand and build the brand equity. Available: https://www.youtube.com/watch?v=bET9Iu5-OIA [Accessed 27 March 2019]. #4 How can you personalize your client interactions so you become partners in creating the future? Development of a sustainable competitive advantage model based on a balanced scorecard. At the same time, the competitive context began to change, as other banks sought to attract lower-income clients as well. The simplicity and efficiency that Capitec bank strives to enable even average consumers to have full access and an understanding of their banking information. Well…., the evidence is out there in every interview, in every shareholder report and every article written about them, and it has not altered much for over 14 years. A good example of an advertisement released by Capitec is the “Bank better to live better” video where they sell experiences that are clearly associated with banking (Capitec Bank 2017: Online). Standard – Our strategy is to build the leading Africa-focused financial services organisation using our competitive advantage to the full. competitive advantage, especially in the long run (sustainable). Michiel Le Roux, founder and CEO of Capitec Bank up until 2004, sums up their philosophy. Behind Capitec's successful model [Online]. (source – Gerrie Fourie quoted by Reuters, 2017), Capitec now has more than 800 branches after opening 76 in 2016 which is more than Absa’s 719, Standard’s 630, FNB’s 645 and Nedbank’s 513. TV ad. Their purpose is very clear, very compelling and only focuses on benefiting their clients. Challenges of the sustainable IS Strategy. The strategic importance of consumer insight in defining place brand identity and positioning. More importantly, though, I’d humbly suggest you must! That hasn’t happened. Required fields are marked *. It demonstrates ease in the banking experience by placing the “true experience” (what the man/woman uses the money for) as the focus of the video. Industry analysis using Porter Five Forces can help Capitec Income in casename case study to map the various forces and identify spaces where Capitec Income can position itself. [s.l. Leave it in the hands of an EXPERT so that YOU can spend your time growing your business. As the banking process is hugely based on trust due to the assets it deals with, the value Capitec bank derives from this process is loyal consumers who trust them. McNulty, A. 2017. The incumbent banks all want to win, and they all want to beat each other. Credit: This article was written under the guidance of The Red & Yellow Creative School of Business while I was studying there. The unaffordability of banking is demonstrated in the line “You’re paying to save your money, and then you pay to get it out” (00:23s). Capitec made sure to know the needs and challenges of their customers in order to form the insight. Both advertisements are engaging with Capitec’s core values which are based on their insights. (source – Bruce Whitfield interviews Gerrie Fourie,2017). Capitec Bank Opportunities Following are the Opportunities in Capitec Bank SWOT Analysis: 1. Products or services can increase in value through branding. The setting then changes to a Capitec branch where it is cleverly mentioned: “I found a bank that doesn’t waste my money or my time; a bank that does innovative things to simplify my life.”. Another powerful example of a company that is applying Capitec’s approach is Amazon. The expected outcome of the combined strategy is long-term, real growth in earnings and assets. Take another look at the decisions they have taken to date. Their advantage is that decision making can be continually framed around whether the proposal will improve simplicity, affordability, accessibility and personalisation for their clients. This all contributes to Capitec’s sustainable competitive advantage. Fourie said Capitec’s credit card offer has been positively received by the market who responded well to its flat administration fee of R35 per month and interest rate as low as prime. The 6 keys to real sustainable competitive advantage [Online]. Capitec bank geared their business for masses and focuses on customer needs rather than the customer’s income (Guma & Makhaya & Nhundu 2015: 30). I help incumbents understand these threats and more importantly the changes they need to take to survive and thrive the 4th industrial revolution. 2009. In a previous post, I asked why some companies consistently make better decisions than their competitors with seeming ease? “Whenever we’re overseas, we’re talking, keeping our eyes open, and seeing what opportunities there are but currently, the focus is on South Africa. Capitec, on the other hand, focuses on solving customer requirements. CSR Web Area: Capitec – Everything we do is to make your life easier and empower you to take control of your money. In this post, I take a look at the 11 decisions Capitec have taken to catapult them from challenger bank to being recognised as the ‘best bank on the planet’. Stellenbosch, , 7600, South Africa. This builds trust in the brand and brand equity. (https://www.capitecbank.co.za/downloads/08.Our_strategy_and_leadership. Janiszewska, K. 2013. 1. These pillars have created a competitive advantage resulting in the big four banks playing catch up. 2007. Your email address will not be published. Capitec Bank. Definition: Sustainable Competitive Advantages. (Source – article was written by Andrew McNulty for Leader.co.za, 2009), “We designed this bank to service 90 to 95% of South Africa’s banking public,” said Fourie. [Online]. Thanks Aimee for posting your personal experiences. Edinburgh: Heriot-Watt University. Lombard, A. -Kaylyn Kemp. Website: Capitec Bank Holdings Ltd. Save my name, email, and website in this browser for the next time I comment. Bank better to live better. If you want to go overseas, you’ll have to take 20/30 senior people to go and really make a success of that. Visit our COVID-19 page for any essential banking needs during the lockdown and the official SA government portal www.sacoronavirus.co.za to stay … Available: https://www.businessinsider.com/the-6-keys-to-sustainable-competitive-advantage-2010-6?IR=T [Accessed 25 March 2019]. This refers to affordability and also speaks of convenience. International Journal of Asian Social Science, 5(5): 298-308. As leaders, you are going to have to take big decisions over the coming years if you want to thrive and survive in an exponential world. Start thinking like an entrepreneur! These are key ingredients in Capitec's growth and its success in executing an innovative strategy. Phone #: 27-11-809-5900. #3 How can you make your products and services more affordable? 2019. Secondly, their stock price has grown exponentially compared to their main competitors. Capitec Bank’s sustainable competitive advantage does not only come from insights converted to actions but from the shift in focus of the bank to the customer, rather than the bank’s risk management and needs, explains McNulty (2009: Online). We ask ourselves what our customers need and how we can give it to them in a way that’s different to, and will beat our competitors.” (Source – Riaan Stassen Interviewed by Entrepreneur Magazine, 2011), Capitec launched a campaign called The Live Free Project. 2019. After all, I’ve never met Michiel Le Roux, Riaan Stassen or Gerrie Fourie? (source – Reuters, 2017). Available: https://www.youtube.com/watch?v=UpI65lADfj8 [Accessed 27 March 2019]. Johannesburg: Strategy&. According to Gerrie Fourie, the current CEO of Capitec, 82% of Capitec’s 13,500 staff are under the age of 35. Vrio analysis for Capitec Strategy To Success case study identified the four main attributes which helps the organization to gain a competitive advantages. The real question, is how Capitec have been able to take such good decisions, so often and execute them so skillfully over such a sustained period? Notably, Capitec Bank Leveraging Banking Innovations To Attract Wealthier Customers technology is one of the most important way of being competitive in the highly competitive market arena. The answer is yes (but’s it’s not easy and I’ll delve into that next time). Businesses implemented numerous successful IT-based strategic systems during the period from 1970 - 1990s, the companies that owned them to gain a competitive advantage for several years before competitors make a replica of their systems (Turban et al, 2006; Hammatfar et al, 2010). Capitec’s consumer insight was most apparent through the solutions that they offer, and these solutions form their sustainable competitive advantage. But clearly as a user Capitec is a South African bank for South Africans in South Africa. The success sustainable competitive advantage holds can be measured by four factors according to Hakkak & Ghodsi, namely, value, rarity, the possibility of not being replaced and the possibility of not being copied. https://strategicmanagementinsight.com/topics/resource-based-view.html According to Hakkak & Ghodsi, sustainable competitive advantage is defined as the permanency of benefits due to applying unique methods to create value, while ensuring that the technique cannot be copied by competitors. The African Journal of Information and Communication (AJIC), 17(1): 111-137. This is an example of how their insights are visible through implementation. “The wealthiest 5 to 10% of the population we leave for the guys offering private banking services”. Capitec executives also consider the bank’s transparency and simplicity as key competitive advantages (Guma & Makhaya & Nhundu 2015: 30). Interesting! Capitec bank was established in 2001 and is now a well-known South African brand (Capitec 2011: 10). We don’t sit around a table and ask ourselves how we can get more money out of our client base. People can now associate Capitec with these values more specifically, as it is visible in all their advertisements. In this quote, Capitec refers to affordable, accessible, convenient and simple banking. In this advertisement, they once again refer to their core principles derived from their insights. 2014. By observing the banking sector, they noted that it is exceedingly sophisticated in South Africa and that the average consumer finds it challenging to understand, which leads to feeling a lack of financial control. (source –  Alec Hogg interviews Riaan Stasson, 2013). If you want to challenge any of the assumptions of conclusions I draw out, the do let me know by commenting back, subscribing to my blog or emailing me directly. ZAE000035861. In contrast with other banks, Capitec trains all their staff in each service department which makes them more efficient. Nedbank – To be the most admired financial services provider in Africa by our staff, clients, shareholders, regulators and the communities. #1 How can you simplify your client’s experience? Simple, personal, affordable and understandable banking is going to require transparent pricing, stores that open late or on Sundays, limiting the product offerings, not bundling or x-selling accessively, having a management team that regularly visits branches, employing young people with empathy and passion before knowledge, encouraging the use of agile, regularly exploring the best of Fintech, finding the fat-tail of clients and remaining laser-like in your focus at the expense of shorter-term goals and international expansion. Capitec Bank. 2018. Another indication of the shortages in the banking sector is the inefficiency of the bank as evidenced by long queues, especially at the end of each month to withdraw money McNulty (2009: Online). Riaan Stassen, Capitec’s CEO from 2004 until 2014, said his company stopped appointing staff from other banks years ago. The Company seeks to recruit individuals who are SKILLED, CREATIVE, MOTIVATED, FLEXIBLE and COMMITTED as a necessity for gaining competitive advantage. These flaws in the banking sectors leave the consumers with a distrust according to McNulty (2009: Online). I don’t remember ever discussing what our competitors are doing. Figure 4.2 below identifies and examines Capitec‟s value chain system, which is crucial to identifying core competencies and translating them into a sustainable competitive advantage. Due to Capitec bank’s insight into the market, they built their core principles to correct what their competitors lacked: affordability, accessibility, convenience, and simplicity. Business Analyst: Innovation & Digital Strategy at Capitec Bank The real question is not whether these were good decisions or not (they obviously were). [Online]. Standard –  Our strategy is to build the leading Africa-focused financial services organisation using our competitive advantage to the full. The interviewer goes on to add “At Capitec, they take simple seriously. Capitec Bank. “Our senior people last year did about 56 trips overseas, and we will probably be close to about a hundred trips overseas [in 2017]” (Gerrie Fourie Interviewed by Biz News, 2017). What are Capitec doing to prevent this scam of debit orders goes of your account? It hires almost exclusively from the retail sector. How you fly, where you stay, the rental car you drive is the same whether you are the CEO or the junior in the company. Everyone gets the same treatment.” (source – Forbes interview Michiel Le Roux, 2016). l Identify the means through which a firm can develop its resources and capabilities. According to porter (2008), there are five forces that influence the level of profitability of any industry; therefore, companies must obtain sustainable competitive advantage in order to survive. With regards to #10: But Capitec wants consumers to “save money, stay out of debt and live within their means”, says Charl Nel, Head: Strategic Communication. Stop thinking like an employee. If you want more information about The Equinox click here. Find out more about simplified banking with Capitec Bank. Integrated Annual report [Online]. Fourie said Capitec’s credit card offer has been positively received by the market who responded well to its flat administration fee of R35 per month and interest rate as low as prime. Firstly they are now recognised as having the second largest customer base in South Africa. Has limited coverage of corporate banking products 2. Capitec has strong competitive advantage in this respect as it offers a simplified and focused product, which benefits its target market. “I wouldn’t know. “Here, there is no distinction between people. Zwilling, M. 2010. A marketplace without boundaries. We’re working on two-week sprints……Other banks and other companies are [doing this] just on the IT side, we’re doing it right across the whole company. As said by Capitec themselves: “Delivery of the most simplified, accessible and affordable banking to consumers in a personalised manner.” This research helped to unveil Capitec bank’s consumer insight (Capitec 2011: 10). The consumer is won over by the idea of a simpler banking experience and puts their trust into Capitec, rather than rationally sticking to old fashioned, familiar and “trustworthy” ways. The Red & Yellow Creative School of Business, https://www.capitecbank.co.za/downloads/Capitec_at_a_glance.pdf, https://www.youtube.com/watch?v=bET9Iu5-OIA, https://www.youtube.com/watch?v=UpI65lADfj8, https://resources.capitecbank.co.za/capitec_bank_integrated_annual_report_2018.pdf, https://www.capitecbank.co.za/?gclid=CjwKCAjw-OHkBRBkEiwAoOZql1uBI4gkaUCdJyOfUtoIUxKglDPq1tdrHrsFmTR_xyge6IBlg34TRBoCprUQAvD_BwE, http://www.marklives.com/2012/04/capitecs-6-ps-of-marketing/, http://www.leader.co.za/article.aspx?s=1&f=1&a=1650, https://www.qmatic.com/globalassets/2017/about-qmatic/resource-library/refcases/financial/capitec_bank_may2014_customer-success-story_a, https://www.businessinsider.com/the-6-keys-to-sustainable-competitive-advantage-2010-6?IR=T, Interested? Capitec set up what they considered an ideal banking model to counteract all the defects visible in other South African banks and to turn their insights into actions. Formula One motor racing and Capitec's innovative banking business may seem far apart but there are common threads, including a competitive culture and ability to achieve results through operational excellence and teamwork. ]: Capitec Bank. Capitec’s 6P’s of marketing [Online]. Capitec planned to create an innovative offering to serve the low-income market and to migrate this offering into higher income groups. ... which provides a competitive advantage over … Research on competition and regulation: competition, barriers to entry and inclusive growth. [Video lecture]. We prefer to offer fewer things and do them well”, says Le Roux. The competitive environment for Capitec was also enhanced by regulatory and policy changes that sought to make the playing field more open and level. Ultimately through branding, it is what will give the brand a long-term competitive advantage (Hakkak & Ghodsi 2015: 300). Not only this, it drives globalization, the factors includes environmental and ecological aspects, and available services as well as products. An insight is an artificial description of attitudes, opinions, and values held by the brand’s target audience; more particularly known as a consumer insight (Janiszewska 2013: 12). So Capitec might be a great company but they are not a great bank! Capitec Bank pioneers service design for customer-centric banking [Online]. Having a strong, customer-centric focus, gives Capitec a simple reference point, which enables them to take these types of decisions (and the many 1000’s more that are taken by their staff across South Africa every day) more easily than their competitors. Capitec specialises in operational efficiency which sets them apart from other banks. The executed insights bring value to both the brand and the consumer. V’s Capitec – Everything we do is to make your life easier and empower you to take control of your money. This seems to be working as the average age of a branch consultant is 23 years old (source – BizNews interview with Gerrie Fourie 2017). Available: http://www.leader.co.za/article.aspx?s=1&f=1&a=1650 [Accessed 25 March 2019]. Capitec‟s cost to inco me ratio is well below the four big banks (Moneyweb, 2012). The message is strong and Capitec bank is doing many things right to achieve this. Another example of how Capitec uses their advertisements to target their audience through their insights is their “TV ad” in which they mention a list of negative traits/activities that one usually associates with banks (Capitec Bank 2016: Online). Your email address will not be published. As the insights Capitec discovered are so unique and different from other banks, they have a sustainable competitive advantage.

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