Africa’s largest retailer of clothing and mobile phones is preparing to enter the banking sector in South Africa by launching zero-fee banking services. The initiative will leverage Pepkor Holdings Ltd.’s extensive network of 6,000 stores across the country to provide financial access to millions of lower-income customers, according to people familiar with the matter.
The new banking arm, expected to be branded as “Pep Bank,” would operate within existing Pepkor retail outlets, enabling rapid rollout and immediate customer engagement. This approach allows the retailer to capitalize on its strong presence in discount retail and its deep customer insights, gathered through years of transactional data, to design tailored financial products.
Pepkor is in advanced discussions with Investec, a lender traditionally focused on high-net-worth individuals, to form a partnership for the venture. While negotiations are ongoing and no final agreement has been reached, sources indicate that profits from Pep Bank would likely be shared between the two companies. Both parties declined to comment on the matter, with Pepkor stating that no formal agreement with any bank currently exists.
For Investec, the potential partnership represents an opportunity to diversify revenue streams amid sluggish economic growth in South Africa. The bank has been actively seeking new income sources, expanding its business banking division, and introducing payment solutions for corporate clients to handle high-volume, low-value transactions.
Pepkor’s move comes as competition in South Africa’s retail-banking space intensifies. Capitec Bank Holdings Ltd., the country’s largest bank by customer numbers, continues to dominate the low-income segment, reporting record profits for the fourth consecutive year in September, driven by strong demand for unsecured lending and deposit services.
Retailers are increasingly leveraging consumer data from loyalty programs to offer financial services to the roughly one-sixth of South Africans who remain unbanked or underserved by traditional institutions. Shoprite Holdings Ltd., the nation’s largest grocery chain, is among those expanding into banking solutions.
Pepkor already has a foothold in financial services through its fintech division, which provides basic offerings such as money transfers, bill payments, and cash withdrawals. The unit’s revenue surged 35% to R7.9 billion in the six months through March, accounting for 16% of Pepkor’s total sales, underscoring the growing importance of financial services in its business model.
