Pepkor secures approval for new South African bank, expands financial services footprint

Pepkor, the JSE-listed discount retailer fast expanding into the financial services sector, has received approval from the Prudential Authority to establish a "fully fledged bank" in South Africa over "the next couple years", said the CFO Riaan Hanekom.

He said in an online presentation the group had been working on plans to form a bank for about two years, and an important step toward this was the acquisition of Cloudbadger in October 2023, a company that provides modern banking software platforms, and which he said represented a cost effective way for the group to obtain this technology.

The move signals further crowding of the traditional banking market - Old Mutual launched its own bank this year, while in the retail space where Pepkor operates, Pick n Pay offers in-store banking services through the fast growing online bank TymeBank, while Shoprite only days ago announced significantly enhanced money transfer options, which already attract some 4 million customers

.Garth Napier, Pepkor's chief commercial officer, said in the presentation they already solve many of their customers' banking requirements.

Pepkor's existaning financial services allow more than 2 million money payments to be made every month, 4 million bill payments, the issue of over 65 000 personal loans, while more than 500 000 customers use an in-store, cash option from the tills instead of an ATM.

The cellphone rental business, FoneYam, onboards over 170 new clients a month, while over 48% of all new accounts opened are the first to be opened bythe customer, indicating how the group is driving financial inclusion, said Napier.

FoneYam, which allows customers to get a new phone affordably by paying a small upfront fee and then fixed monthly instalments, with built‑in insurance protection, reported an about R500 million operating profit in the pastl year compared with a loss the year before.

The group also insures more than one million lives. Pepkor also sells 7 out of 10 new prepaid handsets annually in the country.

"We have demonstrated the ability to acquire customers. We have made significant progress in establishing our banking capabilities. We believe that by leveraging our trusted brands, retail footprint, good customer service and low cost of doing business, we can meet our customers' needs for accessible and affordable banking," said Napier.

Pepkor, which has its roots in clothing and merchandise value retail, said the fintech segment grew by 31.1% to R16.6bn in the past year, driven by 61.4% growth in financial services and a 13.7% rise in Flash, its informal market platform.

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