South Africa’s largest clothing and mobile-phone retailer, Pepkor, is preparing to enter the banking sector by opening branches inside its existing network of more than 6,000 stores across the country, offering transactional accounts with no monthly fees to attract lower-income customers. The move would position the discount chain as a direct competitor to Capitec Bank, which has dominated the low-cost banking space for more than two decades.
According to sources close to the discussions reported by Bloomberg, Pepkor is in advanced talks with Investec about a possible partnership for the venture, which is informally known as Pep Bank. Although no final agreement has been reached and the plans could still change, any deal would see profits shared between the retailer and the private bank, which has traditionally focused on wealthier clients.
By embedding banking outlets within shops that millions of South Africans already visit regularly, Pepkor could roll out services rapidly and at relatively low cost. The company also holds a wealth of transaction data from its retail and fintech operations, enabling it to design financial products specifically for households that are currently unbanked or only lightly served by traditional lenders.
Investec has been actively seeking new revenue streams amid sluggish economic growth in South Africa. In recent years it has expanded its business-banking division and introduced payment systems tailored for companies handling large volumes of small-value transactions, moves that reflect a broader push beyond its high-net-worth core clientele.
The retail-banking landscape in South Africa has long been criticised for leaving large sections of the population underserved. The country’s four dominant banks – Absa, Standard Bank, FirstRand (which owns FNB), and Nedbank – have historically concentrated on middle- and upper-income segments, often operating through branch networks that are inconvenient for many working-class customers.
Capitec was the first institution to exploit this gap successfully. Launched in 2001 with a model built around simplicity, extended operating hours, and minimal charges, it grew from a handful of branches to become the country’s largest bank by customer numbers. As reported by Business Day, Capitec now serves around 25 million clients, representing more than half of South Africa’s adult population, and has built particular strength among younger users who value digital convenience.
In its latest financial results for the six months to August 2025, the bank posted a 26% rise in headline earnings to R8 billion, marking a fourth consecutive year of record profit. Chief executive Graham Lee highlighted the advantages of scale in keeping transaction costs low and funding further digital investment. The bank’s fully banked client base stands at 9.4 million, while its wider personal-banking reach extends to more than half the adult population.
Other retailers have already moved into financial services. Shoprite, the country’s biggest grocer, has used data from its loyalty programmes to offer credit, insurance, and money-transfer products to customers who remain outside the formal banking system. Pepkor itself saw revenue at its fintech division surge 35% to R7.9 billion in the first half of its financial year, now accounting for 16% of group sales.
A Pepkor spokesperson said no partnership agreement with any bank was currently in place and declined to comment further, while Investec also declined to comment when approached.
If the Pep Bank project comes to fruition, zero-fee accounts offered inside familiar discount stores could prove highly attractive to price-sensitive consumers, intensifying competition in a segment where convenience and cost have become the decisive battlegrounds.