Pep’s new bank ‘plusb’ will cost just R920m to build

Pepkor, which is in the process of building a bank offering, says it is targeting a total build cost of under R1 billion for the project.

Group CFO Riaan Hanekom told investors this week that, based on its current forecast, the retailer “will spend no more than R920 million in total cash flow, that’s opex and capex combined” until it launches the bank.

He said it is planning to launch the bank on 1 April 2027.

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So far, it has spent R315 million, with the bulk (R224 million) paid for fintech outfit CloudBadger, which it acquired in October 2025.

Hanekom said it has spent an additional R15 million on capex to integrate CloudBadger into some of its systems, as well as “external financial services platforms”. The cumulative operating expenditure for its banking initiative over the last 18 months has been R76 million.

Regulatory approvals 

The group received Section 13 regulatory approval from the Prudential Authority in November 2025, allowing it to establish a bank, with its Section 16 formal application (for operational readiness) submitted on 20 March.

Aside from the approval of that application, the last remaining regulatory hurdle is permission to accept deposits (Section 17), which it expects to be granted in the fourth quarter.

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OUTsurance previously owned 45% of CloudBadger, which it acquired when it had broader financial services aspirations. It recorded a R9 million loss on the disposal (from which it received R93 million).

CloudBadger’s core banking platform has been in real use for some time and is believed to still form the backbone of Standard Bank’s operations in eSwatini. (In Pepkor’s numbers, Plus B reported revenue of around R30 million in the six months to 30 March from this legacy contract).

Chief commercial officer Garth Napier, previously of Old Mutual, reiterated its medium-term targets in terms of customers.

At its capital markets day at the end of March 2026, it said it aimed to have 1.8 million “primary banked” customers by 2032.

Major advantage identified … 

He said that, unlike some other banks such as TymeBank and Discovery Bank, which are almost entirely digital, it sees its massive physical footprint as a major advantage.

Napier said customers will be able to transact across all of the group’s 6 500 stores and that its bank will be a combination of both.

“In our banking strategy, we believe it’ll be a combination of digital as well as customers using our physical stores, because of the access we can give them.”

He highlighted that the group has in the past shared the significant amount of banking transactions that are already being done in its stores.

Each year, there are already 22 million ‘cash-in’ and 22 million ‘cash-out’ transactions being done in its stores, with more than four million bill payments. This, he said, shows that “the financial activity is already here” – even “without a banking licence”.

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Not only will it use its store base and traditional digital channels, including a new app, WhatsApp and USSD to enable transactions, it will leverage its Flash informal market platform, with those merchants “servicing the last mile”.

In the six months to 30 March, the Flash business reported revenue of R4.9 billion.

This growing network of 176 000 traders will extend the bank’s cash-in and cash-out services, money transfers, bill payments and purchases of value-added services (airtime, electricity) far beyond any traditional financial services footprint.

Comparison with rivals 

Pepkor’s sub-R1 billion build plan pales in comparison with the R2.8 billion that Old Mutual has already ploughed into its OM Bank venture. Of this, R2 billion was dedicated to the core technology build-out.

Discovery spent around R3 billion on the initial digital infrastructure for Discovery Bank.

Its modest budget to build the bank, along with “sub-linear cost scaling” (where costs won’t increase in line with customer growth), will translate into “a lowest-cost bank in all aspects”, with savings being passed on to customers.

It expects the bank to start generating earnings in 2030, with cumulative breakeven (in other words, after the ‘repayment’ of losses) in 2032.

From that point – five years in – it is targeting return on equity of above 30% and sees a total of R8 billion in deposits and R8 billion in loan advances across those 1.8 million customers.

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