Standard Bank and retailer Pepkor are in early talks over a partnership that could reshape South Africa’s personal banking market, combining one of Africa’s largest lenders with a retailer that serves millions of customers through more than 6,000 stores.

People familiar with the discussions said the talks are taking place at senior levels within both companies and are progressing, although no agreement has been reached. Together, Standard Bank and Pepkor serve more than 50 million customers.

The discussions follow Pepkor’s receipt of a banking license from the South African Reserve Bank last year. The retailer, which owns brands including Pep and Ackermans, plans to launch its banking business, PlusB, next year with a focus on lower-income consumers and township communities.

Retail banking partnership under consideration

Under the proposal being explored, Standard Bank would contribute its banking expertise alongside Liberty’s insurance, savings and investment products, while Pepkor would provide access to its nationwide retail network and established customer base. The companies are also considering a revamped rewards programme as part of the offering.

For Standard Bank, Pepkor’s extensive footprint and low-cost operating model provide access to customers beyond the reach of traditional banking channels. A commercial partnership would also face fewer regulatory and competition hurdles than a merger.

Neither company confirmed the talks. “Standard Bank does not comment on speculation. What we can affirm is our ongoing commitment to our clients and to delivering value across all segments of the South African market,” the bank said.

Pepkor said: “Pepkor does not comment on rumours or speculation. We can confirm, however, that there is no such agreement or partnership with any bank.”

Pepkor builds on growing financial services business

Pepkor is entering banking from a position of strength rather than as a new market entrant. Over the years, it has expanded beyond retail into credit, lending, bill payments, money transfers and insurance, giving it an established financial services platform.

The retailer estimates that about 32 million customers visit its stores each year, providing a sizeable audience for its banking products. It also has more physical locations than the combined branch networks of South Africa’s four largest banks.

Financial services continue to be one of Pepkor’s fastest-growing businesses. Revenue from the division climbed 41% to R3 billion ($180.8 million) in the six months ended March, while operating profit rose 63.4% to R691 million ($41.6 million).

Its FoneYam smartphone rental business increased activated accounts by 32% to 1.3 million, taking the active customer base to 2.4 million. Repeat rentals have exceeded expectations, helping extend customer relationships.

Pepkor’s insurance business now covers 1.3 million lives, while Capfin expanded its active loan book to 378,000 loans, with gross advances reaching R5.3 billion ($319.4 million).

Competition with Capitec set to intensify

Pepkor’s banking ambitions place it on a collision course with Capitec, South Africa’s largest bank by customer numbers, which is also targeting the mass market and informal business sector.

Pepkor’s Flash platform processed R34.7 billion ($2.1 billion) in transactions during the six-month period, up 20.3%, with 176,000 active traders. Combined with its dominance in smartphone sales, the retailer is well positioned to expand digital banking services through PlusB.

The retailer is also strengthening its fintech position after agreeing to combine Flash with Shop2Shop in a transaction valued at R12.17 billion ($738.5 million), creating one of South Africa’s largest merchant commerce platforms.

As banking, retail and technology increasingly converge, Standard Bank and Pepkor’s potential alliance reflects a broader shift toward ecosystem-based financial services in Africa.