The move signals a major shift in South Africa’s retail and banking sectors, where retailers are increasingly moving into financial services to unlock higher-margin revenue streams and build deeper relationships with cash-strapped consumers.
Pepkor wants to use its enormous physical footprint as a competitive advantage. The retailer operates more than 6,500 stores across southern Africa, giving it one of the widest distribution networks in the region.
Executives say customers will be able to access banking services both digitally and physically through Pepkor’s stores, creating a hybrid model aimed at consumers who remain underserved by traditional banks.
That matters because South Africa’s banking industry, despite being one of the continent’s most advanced, is still dominated by a small group of powerful lenders including Standard Bank, FirstRand, Absa Group and Nedbank.
But competition is rapidly intensifying as digital banks, fintech startups and large retailers chase lower-income and previously unbanked consumers with cheaper mobile-first services.
Pepkor’s planned bank arrives as smartphone adoption and digital payments continue to accelerate across Africa, creating new opportunities for non-bank businesses to enter financial services.
The company has already secured conditional approval from South Africa’s Prudential Authority to establish the bank. Pepkor has also submitted a Section 16 application, the formal regulatory process required to register a bank.
The bank is currently operating under the codename “plusb”.
To strengthen the project, Pepkor acquired CloudBadger Technologies in October 2025. The technology company specialises in banking software and financial services platforms.
Pepkor Chief Commercial Officer Garth Napier told investors the group’s advantage lies in combining digital banking with a massive physical retail presence.
The retailer already processes around 22 million cash-in and cash-out transactions every year, alongside roughly four million bill payments, showing how deeply financial services are already embedded in its operations.
Pepkor’s growing fintech ecosystem extends well beyond banking.
Its smartphone rental platform, FoneYam, activated 1.3 million new accounts during the six months ended March 2026, taking its active customer base to 2.4 million.
The rental book expanded 53% year-on-year to R2.6 billion ($159 million), highlighting growing demand for financed smartphones as consumers struggle with affordability.
Pepkor’s insurance business, Abacus Insurance, more than doubled revenue to R718 million ($43.9 million), while its funeral cover products now protect more than 1.3 million lives.
Meanwhile, lending business Capfin increased its active loan base to 378,000 loans, with its gross credit book growing to R5.3 billion ($324.1 million).
The company’s broader financial services division delivered some of the strongest growth across the group.
Revenue from the segment rose 41.6% to R3 billion ($183.5 million), while operating profit surged 63.4% to R691 million ($42.3 million).
Pepkor’s aggressive push into banking also reflects a wider African trend where retailers and telecom-linked businesses are increasingly becoming financial platforms.
Across the continent, companies with large customer networks are using payments, loans, insurance and digital banking to generate recurring income while keeping consumers tied more closely to their ecosystems.
Pepkor previously estimated that building the bank would cost less than R1 billion. The retailer now expects total spending to come in below R920 million ($56.3 million), based on the latest exchange rate of $1 to 16.3510 rand.
Executives have said they expect the bank to generate a return on equity above 30% by its fifth year if rollout plans succeed.
The retailer’s core business also remained resilient despite pressure on South African households from inflation, weak economic growth, rising electricity costs and stubbornly high unemployment.
Pepkor reported a 13.2% rise in group revenue to R54.8 billion ($3.35 billion) in the six months ended March 2026.
Headline earnings per share increased 10.3% to 93.1 cents, while operating profit climbed 9.4% to R6.3 billion ($385.3 million).
Chief executive Pieter Erasmus said the company continued to expand its “retail-powered consumer platform” through financial services and informal market operations.
If successful, Pepkor’s banking push could become one of the most closely watched retail-finance experiments in Africa, especially as traditional banks face mounting pressure from digital challengers with stronger consumer reach and lower operating costs.
