Their competitors being well established made it challenging for them to break through in the monopolised market, yet their differentiating agents set them apart from their competitors as they are all run similarly. Michiel Le Roux, founder and CEO of Capitec Bank up until 2004, sums up their philosophy. The message is strong and Capitec bank is doing many things right to achieve this. A core competency is a specific skill set or expertise that can lead to a competitive advantage. [Video lecture]. Advising consumers not to spend money might seem like a paradox for a bank – particularly given that they were blamed for the debt crisis that triggered the global recession in 2007. 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. Behind Capitec's successful model [Online]. If you enjoyed this post don’t forget to share with others. Has limited coverage of corporate banking products 2. Due to Capitec’s insights, they have the power to communicate their solutions through advertisements directly to the consumers. The answer is yes (but’s it’s not easy and I’ll delve into that next time). Find out more about simplified banking with Capitec Bank. -Kaylyn Kemp. I leave you with 5 questions that might kick-start your move towards becoming a more purposeful organisation. 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. Their purpose is very clear, very compelling and only focuses on benefiting their clients. Capitec Bank. (https://www.capitecbank.co.za/downloads/08.Our_strategy_and_leadership. “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. Start thinking like an entrepreneur! Available: https://www.qmatic.com/globalassets/2017/about-qmatic/resource-library/refcases/financial/capitec_bank_may2014_customer-success-story_a.pdf [Accessed 25 March 2019]. 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. Branding helps consumers to categorise a particular product or service and associate it with a valuable identity the brand chooses to portray (Lombard 2007: 23). Their solution to this problem was to simplify the banking process and offer needed assistance to consumers. 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. TV ad. Their cash withdrawal options and their paperless system (replaced by biometrics) require less space and customers do not have to deal with long queues. Pullig, C. 2008. Colin Iles is CxO of The Equinox, Africa’s premier Leadership Innovation and Strategy Centre. Hakkak and Ghodsi‘s statement about the emotional connection in terms of insights proves to be true here (2015: 300). Johannesburg: Strategy&. However, this challenge was overcome through the simplicity and transparency Capitec offers its customers (Guma & Makhaya & Nhundu 2015: 30). 4. 2018. 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. Integrated Annual report [Online]. Our only focus is understanding what our clients want and trying our hardest to deliver that“. 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. 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). Although the product or service can be copied by competitors, effective branding is what sets one apart from the other giving one the competitive advantage (Lombard 2007: 25). I don’t remember ever discussing what our competitors are doing. 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.”. This seems to be working as the average age of a branch consultant is 23 years old (source – BizNews interview with Gerrie Fourie 2017). That hasn’t happened. The campaign staged events that highlighted ways in which consumers could enjoy themselves without spending money. Nobody flies business class. Let’s start by laying out Capitec Bank’s credentials. Capitec Credit Card Summary. Journal of International Studies, 6(2): 9-19. Currently, we need all decks on hand to deliver on our promise, so that’s where the focus is.” (source – Gerrie Fourie interviewed by Alec Hogg, 2016). (source – Reuters, 2017). 2017. Consumer insights are often not only rational but also emotionally driven (Janiszewska 2013:12). The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Competitive advantage through relationships in ABSA Private Bank Page III Browne, R.A. 2011 EXECUTIVE SUMMARY Private banking is the evolution of traditional retail banking, catering to the financial needs of specifically affluent individuals. 2019. (Source – Riaan Stassen Interviewed by Entrepreneur Magazine, 2011), “When you have a branch network, it is easy to get seduced by other opportunities and start diluting your focus. Definition: Sustainable Competitive Advantages. Available: https://www.businessinsider.com/the-6-keys-to-sustainable-competitive-advantage-2010-6?IR=T [Accessed 25 March 2019]. “ Gerrie Fourie Interviewed by Biz News, 2017. Save my name, email, and website in this browser for the next time I comment. Capitec Bank Opportunities Following are the Opportunities in Capitec Bank SWOT Analysis: 1. Consider the following mission/vision statements…. With an average of 14 000 new credit card clients per month, disbursements increased by 57% to R6.2 billion. These principles were carried through by lowering fees, having numerous branches available and also being open seven days a week; therefore, making it possible for their customers to withdraw cash at ATMs and selected retailers and discarding paperwork which makes all processes quick and simple (McNulty 2009: Online). By observing and analysing the target audience’s behaviour, a brand can often identify common behaviour within its target audience which leads to an insight. “I wouldn’t know. 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. I’m also not suggesting that we should simply copy and paste these decisions verbatim (although many of them might apply to your industry). Riaan Stassen, Capitec’s CEO from 2004 until 2014, said his company stopped appointing staff from other banks years ago. 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. Simplicity is communicated throughout the video as Capitec shows how easy and simple the whole banking experience is. 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. So why do I believe that Capitec Bank is winning because of a strong, binding sense of purpose? At a recent Equinox event,  Geoff Brown, the sub-Saharan Head of Amazon Web Services was asked why he felt their cloud offering was better than Microsofts Azure…..? Thanks Aimee for posting your personal experiences. 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). #3 How can you make your products and services more affordable? In contrast with other banks, Capitec trains all their staff in each service department which makes them more efficient. Competitive advantage is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition. #2 How can you make your products and services more accessible to everyone that could benefit from them? Competition, barriers to entry and inclusive growth in retail banking: Capitec case study. 2017. ... which provides a competitive advantage over … Available: https://www.youtube.com/watch?v=UpI65lADfj8 [Accessed 27 March 2019]. Capitec’s consumer insight (that consumers find banking extremely overwhelming and that it causes distrust in banks) is directly addressed in this advertisement. In this quote, Capitec refers to affordable, accessible, convenient and simple banking. Capitec Bank. Contributing to Capitec‟s success and the basis on which its business model is built are four pillars: accessibility, simplicity, affordability and personalised service. (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. Capitec executives also consider the bank’s transparency and simplicity as key competitive advantages (Guma & Makhaya & Nhundu 2015: 30). “Not everything needs to be about making more money off your customers. #1 How can you simplify your client’s experience? Address: NA. & Proctor, T. 2017. Strengths are the Capitec Income capabilities and resources that it can leverage to build a sustainable competitive advantage in the marketplace. Even though these terms may sound quite similar to one another, competitive advantage and core competency are quite distinct. We don’t sit around a table and ask ourselves how we can get more money out of our client base. 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). 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. V’s ABSA Private Bank (APB) is … 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). Book a Free Strategy Call Now. ]: Capitec Bank. Our strategies are aligned with the overriding objective of continuous long-term creation of sustainable value for all who have an interest in the business. 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). “Here, there is no distinction between people. They make their own rules which cause you to have to go into 1 of their 800 banks when you need to do more than just pay or transfer. Their goal is to help their clients win…not themselves. 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. Brinckmann, S. & Camarate, J. Lessons from Ted Lasso – #2 Be Curious Not Judgemental, http://www.destinyconnect.com/2017/05/22/capitec-overthrows-fnb-become-sas-best-digital-bank/. The business models that made organisations successful are now becoming their biggest threat in an exponential world. Manson, H. 2012. These pillars have created a competitive advantage resulting in the big four banks playing catch up. Carter, S. & Priest, J. [Video lecture]. Pressed for a response on these developments, Stassen implied that Capitec had a competitive advantage as it had a good understanding of the market it was playing in. Student Number: 79048633. And finally, the beauty is that as leaders, we can replicate their approach in our businesses. The reference to “innovative” covers Capitec’s market insight that technology can be used for more efficient banking (Capitec Bank 2016: Online). Pretoria: University of Pretoria. Guma, N. & Makhaya, T. & Nhundu, N. 2015. Secondly, their stock price has grown exponentially compared to their main competitors. Capitec’s consumer insight was most apparent through the solutions that they offer, and these solutions form their sustainable competitive advantage. Capitec has strong competitive advantage in this respect as it offers a simplified and focused product, which benefits its target market. 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. If you’re growing by 100/150,000 clients per month, you need to make certain that you deliver in South Africa and that’s where our focus is currently. With regards to #10: No suits, the CEO’s office is the same size as everyone else’s; the CEO shares a personal assistant, no personalised parking spots, even the guard at the gate calls him Michiel, while the receptionist jokes freely about his sense of style — or lack thereof.”, “Needs are coming in quicker and quicker and we need to adapt much quicker, so what we’ve done is, to move the whole bank onto an agile platform. Sustainable competitive advantages are company assets, attributes, or abilities that are difficult to duplicate or exceed; and provide a superior or favorable long term position over competitors. Standard – Our strategy is to build the leading Africa-focused financial services organisation using our competitive advantage to the full. The Company seeks to recruit individuals who are SKILLED, CREATIVE, MOTIVATED, FLEXIBLE and COMMITTED as a necessity for gaining competitive advantage. Capitec Bank. V’s Capitec – Everything we do is to make your life easier and empower you to take control of your money. Available: http://www.marklives.com/2012/04/capitecs-6-ps-of-marketing/ [Accessed 25 March 2019]. [s.l. The simplicity and efficiency that Capitec bank strives to enable even average consumers to have full access and an understanding of their banking information. As Capitec offers many cash withdrawal options, they have not only saved vast amounts on security costs due to no armoured glass and metal gates being needed, but this also enabled them to be more interactive with customers making the banking experience more personal and pleasant (McNulty 2009: Online). Both advertisements are engaging with Capitec’s core values which are based on their insights. Strengths come from positive aspects of five key resources & capabilities - financial resources, activities & processes, past experiences and successes, physical resources such as land, building, and human resources . 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). “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). Capitec, on the other hand, focuses on solving customer requirements. #4 How can you personalize your client interactions so you become partners in creating the future? This is not to mention the expensive and hidden costs that come with many banks. Mostly confined to South Africa. “The wealthiest 5 to 10% of the population we leave for the guys offering private banking services”. Available: http://www.leader.co.za/article.aspx?s=1&f=1&a=1650 [Accessed 25 March 2019]. As the insights Capitec discovered are so unique and different from other banks, they have a sustainable competitive advantage. Ultimately through branding, it is what will give the brand a long-term competitive advantage (Hakkak & Ghodsi 2015: 300). Capitec’s goal was to ease the stress of the consumer and to win his/her trust. 1. 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. 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. Capitec describes themselves as “A unique and innovative bank that focuses on technologically driven, simplified solutions to retail banking.”. As the banking sector in South Africa is becoming increasingly competitive with new players like Capitec slowly penetrating the market, a model is needed to demonstrate the ... Where can banks focus their efforts in order to achieve sustainable competitive advantage? 2011. 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. 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? Capitec‟s cost to inco me ratio is well below the four big banks (Moneyweb, 2012). Capitec Bank mostly caters for, but is not limited to, the mass market and the low-income sector and is also expanding to the middle market. Capitec Bank pioneers service design for customer-centric banking [Online]. Qmatic. The real question is not whether these were good decisions or not (they obviously were). (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. I can’t stand all those strategies about cross-selling or upselling. The 2008 Banking Enquiry focused attention on retail banking and heightened awareness about competitive behaviour in the sector. Capitec Bank. A company’s sustainable competitive advantage is mostly affected by three factors, namely, target market size, access to consumers and resources and the power of the competitors (Hakkak & Ghodsi 2015: 300). To achieve above average profits compare to other industry players in the long run, Capitec Income needs to develop a sustainable competitive advantage. Stellenbosch, , 7600, South Africa. 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. [Online]. Accessibility and convenience are communicated 13 seconds into the advertisement when the woman pays the man through the Capitec application on her cellphone. Marketing Insights. The case examines Capitec's strategic options for survival and expansion in this context. Whether you sit on a Board or an Executive Committee or any other leadership position you are going to have to start increasing your focus towards genuinely solving issues for the client rather than the shareholders. If you want more information about Colin click here.
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