Why South Africa’s banks are becoming telecom companies

South Africa’s banks are no longer competing only for deposits, loans and payments. Increasingly, they are battling over something less visible but more valuable: the digital infrastructure that powers customers’ everyday lives.

Over the past decade, lenders including FNB, Capitec, Standard Bank and Nedbank have quietly built mobile virtual network operator (MVNO) businesses. Absa is now preparing to join them, accelerating a shift that is reshaping what it means to be a bank in South Africa’s saturated financial market.

The expansion marks a significant shift in strategy. South Africa’s biggest banks increasingly see connectivity as a way to win a larger share of customers’ daily digital lives, using mobile services to acquire users, deepen engagement and create new revenue streams in a slowing banking market.

With South Africa’s MVNO market projected to more than triple from 4.4 million active SIMs in 2025 to 14.4 million by 2030, driven largely by banking MVNOs, the country’s experiment with ecosystem-led banking could offer an early blueprint for how banks across Africa deepen customer loyalty and grow beyond traditional financial services.

The shift raises a bigger question. Why are banks suddenly behaving like telecom companies?

Digital lives

For FNB Connect, the bank’s MVNO, telecom has moved far beyond selling airtime and data bundles. “FNB Connect has evolved from a value-led MVNO focused squarely on providing access to connectivity into a trusted, customer-centric value driver that innovates within FNB’s broader ecosystem,” Sashin Sookroo, CEO of FNB Connect, told TechCabal.

Today, the bank views its MVNO as a customer engagement platform, a data-driven business and a contributor to non-interest revenue. Sookroo said connectivity now sits at the centre of how the bank attracts and retains customers.

“FNB Connect plays a dual role within the ecosystem: as a customer acquisition channel, attracting customers seeking affordable access to the latest devices and integrated banking benefits, and as a relationship deepening tool,” he said.

According to Sookroo, FNB data consumption on its network grew 98% year-on-year between July 2025 and May 2026, with customers using more than 40 petabytes during the period. Device sales exceeded R600 million ($36 million). More importantly, he revealed that customers who use both banking and telecom services are significantly stickier.

“Multi-product customers show higher retention, lower propensity to switch and greater lifetime value,” stated Sookroo.

Across the industry, a similar pattern is emerging that shows connectivity is no longer an add-on. It is becoming embedded infrastructure for banking itself.

Banking infrastructure

Absa’s planned entry into the MVNO market is a testament to how far the sector has shifted. While the bank has not announced a launch date, its move will effectively complete the circle among South Africa’s major retail banks.

Nick Nkosi, Managing Executive for Transactional and Deposits in Personal and Private Banking at Absa, told TechCabal the lender is actively evaluating how connectivity fits into its broader ecosystem strategy.

“As part of our broader Value-Added Services, we are assessing models in the MVNO space to understand how this could enhance our value proposition and strengthen everyday banking experiences for our customers,” he said.

The rationale is straightforward: as banking shifts to mobile-first channels, connectivity becomes inseparable from the product experience. Controlling that layer creates more frequent customer interactions and opens additional distribution channels for financial services.

FNB echoes this thinking. Sookroo said the bank increasingly sees itself as a platform rather than a traditional financial institution. “FNB is embedded in customers’ everyday digital interactions, blending financial, telecoms, retail and digital commerce services,” he said. The model allows the bank “to produce, aggregate and distribute value across ecosystems.”

Nedbank is pursuing a similar direction.

Dayalan Govender, managing executive for product, design and innovation at Nedbank, told TechCabal that connectivity is now viewed as an extension of its ecosystem rather than a standalone revenue stream. 

“We recognised the high cost of data in South Africa as a critical need to address for our clients,” Govender said. “By integrating connectivity with our broader ecosystem, including Greenbacks rewards and digital banking channels, we are enhancing everyday value for clients while deepening relationships and supporting their digital lives.”

He added that competition in the MVNO space will not be defined by pricing alone. “Differentiation will come from offering a holistic, integrated ecosystem that connects financial and non-financial services, rather than competing purely on mobile pricing or standalone offerings,” he told TechCabal.

Standard Bank has also repositioned connectivity as a core infrastructure.

Kartik Mistry, executive head of Standard Bank Connect, told TechCabal that the bank no longer treats connectivity as a peripheral product. “The way customers engage with financial services has fundamentally changed,” he said. “Today, banking is increasingly digital, and digital banking depends on reliable connectivity.”

Mistry said banking, telecoms and digital services are converging into a single customer experience. “We see a natural convergence between banking, connectivity and digital services, as customers increasingly expect seamless, integrated digital experiences,” he said.

Taken together, the banks’ positions point to a broader swing: they are no longer competing only against each other, but are also taking on telecom operators, retailers and digital platforms for control of customers’ attention.

Structural edge

Africa Analysis, a marketing research company that has done an extensive report on South African MVNOs, say banks possess structural advantages that make them unusually well-positioned to succeed in telecom. 

“The first thing is that they have a brand and they have a customer base,” Andre Willis, managing director at Africa Analysis, told TechCabal. “More importantly, they understand that customer base because they already have the financial history of customers on file.”

Willis said MVNO success depends on four pillars: brand, customer base, distribution and customer operations. “Banks tick all four boxes,” he said.

Retailers, by contrast, typically fall short on service infrastructure. “If you have a problem with your bank account, you know exactly who to call,” Willis said. “Retailers don’t always have that same customer support capability, which gives banks a significant advantage in the MVNO market.”

That advantage extends to product bundling. Banks can combine handset financing, rewards systems and credit-linked connectivity in a single offering, underpinned by customer financial data and in-house risk models. Telecom operators can match elements of this on pricing or rewards, but they lack the credit infrastructure and behavioural insight that allow banks to seamlessly underwrite devices and tailor bundles at scale.

Data as currency

The rise of banking MVNOs also reflects a shift in how consumers use mobile services. Voice calls have been largely replaced by internet-based messaging platforms such as WhatsApp, making data the core input of digital communication. Banks are increasingly using data as a loyalty mechanism. “Data has effectively become the currency of connectivity,” stated Willis.

Rather than discounting services, banks are rewarding customers with data to drive engagement across their ecosystems. The strategy strengthens retention while increasing usage of banking, credit and investment products. “South Africa’s banks are no longer content to sit inside customers’ wallets. They are competing to become the digital ecosystem surrounding them,” said Willis.