South Africa is Run by a Bank Cartel πŸ‡ΏπŸ‡¦ 🏦

Despite having a population of nearly 60 million, South Africa's banking landscape remains dominated by a handful of large institutions.

Ruger Stocking
Ruger Stocking

By Ruger Stocking


Despite having a population of nearly 60 million, South Africa's banking landscape remains dominated by a handful of large institutions. The industry is highly concentrated, with the top five banks – Standard Bank, First National Bank (FNB), Absa, Nedbank, and Capitec – holding over 90% of the market share. This article delves into the factors contributing to this limited number of banks, the implications on the South African economy, and potential solutions to encourage greater competition and financial inclusion.

Historical Context and Regulatory Environment

The concentration of South Africa's banking industry can be traced back to its historical and political context. The apartheid era shaped the economic structure, with banks primarily serving the white minority population. As a result, a substantial part of the population, mainly Black Africans, was excluded from access to formal financial services. Although the post-apartheid government has made efforts to promote financial inclusion, these historical disparities continue to impact the sector.

Moreover, South Africa's regulatory environment is relatively strict, with high capital requirements and stringent licensing processes, creating barriers for new entrants. The tight regulatory controls have made it difficult for smaller banks to compete with the entrenched players, reinforcing the dominance of the existing institutions.

Economies of Scale and Market Perception

The large banks in South Africa benefit from economies of scale, which give them a significant advantage over smaller competitors. Their extensive branch networks, established customer base, and comprehensive service offerings make it challenging for new entrants to gain a foothold in the market. Additionally, the perception of stability and security associated with these large banks makes them the preferred choice for many consumers and businesses.

Lack of Financial Inclusion

The limited number of banks in South Africa has implications for financial inclusion, with approximately 11 million people remaining unbanked or underbanked. A lack of competition in the banking sector means there is less incentive for banks to innovate or develop products and services targeting low-income or rural populations. As a result, many South Africans rely on informal financial services, which may be more costly and less secure.

The Potential of Digital Transformation

Digital transformation holds the key to increasing competition and promoting financial inclusion in South Africa. The rise of digital banks, fintech, and mobile banking solutions can help address the challenges of the traditional banking sector. For instance, TymeBank, South Africa's first fully digital bank, has attracted over 3 million customers since its launch in 2019, highlighting the demand for alternative banking services.

By leveraging digital technology, new entrants can reduce operating costs, enhance service delivery, and reach underserved populations. Furthermore, digital banking platforms can promote financial literacy, enabling consumers to make informed decisions about their financial needs.

Policy Recommendations

To foster competition and financial inclusion in South Africa's banking sector, the following policy recommendations should be considered:

  1. Review regulatory barriers: Authorities should reassess licensing requirements, capital thresholds, and compliance regulations to facilitate the entry of new banks, while ensuring financial stability.
  2. Encourage innovation: Supporting fintech and digital banking solutions can help bridge the gap between formal financial services and the unbanked population.
  3. Strengthen consumer protection: A robust consumer protection framework can build trust in alternative financial service providers, encouraging more people to use formal financial services.
  4. Promote financial education: Financial literacy programs can empower consumers, enabling them to make informed choices and take advantage of a more competitive banking landscape.


While South Africa's banking sector remains highly concentrated, there is significant potential for change. By addressing regulatory barriers, promoting innovation, and ensuring consumer protection, the country can foster greater competition and financial inclusion. As digital transformation reshapes the banking landscape, South Africa has an opportunity to create more banking options for its populace.

South Africa πŸ‡ΏπŸ‡¦

Ruger Stocking Twitter

CEO & Founder of Ruil Capital LLC and Editor of the Ruil Report. Contributor at