Pepkor’s financial services business is growing at an exponential rate, adding gravitas to the group’s ambitions to launch a bank and take on the established lenders in the fight for the mass market wallet. The group on Tuesday reported a 41% surge in revenue to R3bn from its financial services segment in the six months ended March, a surge that lifted the segment’s operating profit by 63.4% to R691m.The retail supermajor, with an arsenal of more than 6,600 stores, last year got the green light from the South African Reserve Bank to open a bank, with its more than 10-million digital clients and expansive branch network giving it a platform from which to build a bank.With 32-million clients, Pepkor is expected to be a force to be reckoned with as it launches a foray into retail banking.The key leg to its financial services, Foneyam, a smartphone rental product, reported a 32% increase in activated accounts in the period under review, which translates to 1.3-million cellular rental accounts, taking the active base to 2.4-million. “Customer take-up of a second FoneYam rental after completing the first has exceeded expectations, effectively extending customer lifetime value,” the company said.Pepkor’s group revenue increased 13.2% to R54.8bn, resulting in 9.4% growth in operating profit to R6.3bnThe group’s insurance proposition covers 1.3-million lives, while its personal loans platform, Capfin, grew its active loan base to 378,000 loans.Capfin’s gross credit book increased to R5.3bn in the six months under review. Pepkor’s informal market play is also gaining traction, a market the country’s largest bank by customer numbers Capitec has also eyed, building its business lending platform.Pepkor’s informal market proposition Flash reported a 20.3% increase in throughput to R34.7bn, ending the six months under review with 176,000 active traders.The imminent entry into fully fledged banking by Pepkor comes as insurance groups also eye the mass market.Sanlam is deepening its relationship with GoTyme, previously TymeBank, to tap into its 12-million client base. Sanlam, together with GoTyme, has more than 17-million clients, last week said: “Work continues to prepare for the launch of banking services in the South African market, in partnership with GoTyme, subject to pending regulatory approval.”Old Mutual has also re-entered the banking space with the launch of OM Bank nearly a decade after it disposed of its majority stake in Nedbank. The country’s leading telecommunications companies have also built formidable fintech propositions. Pepkor’s group revenue increased 13.2% to R54.8bn, resulting in 9.4% growth in operating profit to R6.3bn.We continue to expand our scalable, retail-powered consumer platform, extending our reach through financial services and the informal market, serving customer needs from babywear to banking— Pieter Erasmus, Pepkor CEOThe group’s cash cow, the retail business, grew sales by more than 10%. PEP increased sales by 6.3%, expanding market share in babies, kids, adults and the home market. Ackermans sales were muted, growing sales by only 1.3%. However, the brand gained market share in schoolwear and footwear, and online sales surged by 72%.The specialty division reported a 49.1% surge in sales, aided by the acquisition of Legit, Swagga and Style. “Newly acquired Legit outperformed expectations with 13.0% sales growth in womenswear,” the group said.Pepkor’s furniture, appliances and electronics segment grew sales by 13.9% in the period. The group is looking to beef up this segment through the acquisition of Shoprite’s furniture business, a deal that has been held up by Lewis’s opposition.Group CEO Pieter Erasmus said the company, worth R81bn on the JSE, is focused on:the continued expansion of its retail platform across categories, segments and geographies; the integration of acquired businesses; the scaling of its financial services and banking proposition; and ongoing growth across the informal market value chain.“These results reflect the strength of our business model and the disciplined execution of our strategy. We continue to expand our scalable, retail-powered consumer platform, extending our reach through financial services and the informal market, serving customer needs from babywear to banking,” he said.Business Day