Innovative Approaches to Delivering Microfinance Services: The Case of Capitec Bank

This paper discusses Capitec Bank, a profit motivated South African MFI providing a range of financial services to a clientele referred to as the ‘unbanked’ in the country, and lays emphasis on the innovations that the bank has made. The paper states that the founders of the bank focused on servicing clients in the lower income sector of the Southern African market and providing individuals and small businesses with a range of banking facilities that were economical and affordable.

The bank consists of:

• FinAid: Provides one short term micro loan product to approximately 100,000 individual clients;
• Capitec: Focuses on providing financing through a more structured environment to a higher income group;
• Capitec CBS: Provides commercial, unsecured loans on the stock required for the running of small, medium and micro enterprises in the informal market place.

Capitec focuses on four key areas in its delivery strategy: accessibility, affordability, face-to-face service in the client home language and simplicity in the application process and transactions. The paper lists the future challenges for the bank as:

• Firmly establishing the corporate image;
• Conversion of FinAid branches to Capitec branches;
• Expansion of product range;
• Development of a relationship of trust with the market and investors.

The paper concludes by detailing Capitec Bank’s achievements:

• Customer-focused approach;
• Clients not swamped with technology and paper;
• Good understanding of the market.