South African banks entered the MVNO arena hoping to lock customers behind a proprietary phone number, capture behavioural data and create switching costs that would make churn a distant worry. The strategy appeared to work – Capitec Connect posted a R442 million net profit in the year to February 2026, and its 1.5 million subscribers were tethered to Cell C through free‑on‑net voice minutes. Yet the battlefield has shifted from voice to data, and that pivot is exposing a structural weakness that could undermine the banks’ defensive posture.
The data‑driven battlefield the banking MVNO was not built for
Mobile operators are now racing to dominate data traffic, where the real value of a customer relationship resides. In the first half of 2025, MTN’s data traffic surged 29.1 % year‑on‑year, while Vodacom recorded a 36.4 % increase over its 2025 financial year. Over‑the‑top services such as WhatsApp, video streaming and messaging continue to erode traditional voice and SMS revenues, turning the phone number into a relic of the past.
| Metric | 2024 | 2025 | Growth |
|---|---|---|---|
| MTN data traffic (PB) | 1,200 | 1,548 | +29.1 % |
| Vodacom data traffic (PB) | 1,030 | 1,403 | +36.4 % |
| Voice minutes (B) | 2,100 | 2,020 | –3.8 % |
| SMS volume (B) | 1,500 | 1,380 | –8.0 % |
The table shows that while voice usage is in mild decline, data consumption is exploding, confirming that the arena where banks hoped to defend their customers has moved beneath their feet.
Operators now wield data‑level pricing power that MVNOs cannot replicate. When a bank zero‑rates its app, the host operator charges the MVNO for every megabyte traversed – a cost the bank must absorb. In contrast, an operator like Vodacom can zero‑rate its own VodaPay app internally, with the data expense simply moving between internal accounts. The result is a cost asymmetry that favours the operators and erodes the banks’ profitability on digital channels.
Scale of the operator advantage
Across the continent, Vodacom and MTN have turned mobile money into a trillion‑dollar business, dwarfing the modest reach of South African banking MVNOs. Vodacom’s fintech arm topped 103 million active users in the year to March 2026, a 17.4 % rise, while MTN’s MoMo platform processed over US$500 billion in transactions in 2025, up 37.6 %. Combined, the two giants handle more than $1 trillion in mobile money each year.
| Operator | Active fintech users | Transaction value (US$ bn) | Year‑on‑year growth |
|---|---|---|---|
| Vodacom | 103 m | 420 | +17.4 % |
| MTN | 69.5 m | 500 | +37.6 % |
| Combined | 172.5 m | >1,000 | — |
This comparison underlines that operators already command a customer base and transaction volume far beyond the reach of any banking MVNO in South Africa, giving them a decisive edge in data‑centric financial services.
The hidden cost of zero‑rating
All major South African banks – Capitec, FNB, Standard Bank and Nedbank – offer zero‑rated banking apps, meaning customers face no data charge when using the service. The catch lies in who foots the bill.
- VodaPay is zero‑rated only for Vodacom subscribers; the data cost stays inside the Vodacom group.
- Banking MVNOs must pay their host operator for each megabyte their customers consume. That expense appears as a regular invoice, effectively paying a competitor to host both voice and data traffic.
Standard Bank Connect and Nedbank Connect, both hosted on MTN, pay the operator for bandwidth while MTN simultaneously expands its own MoMo‑based financial services. The MVNO pays for a service that directly competes with the host’s own platform, creating a conflict of interest that benefits the operator.
What banks stand to lose
The strategic appeal of a banking MVNO remains the behavioural data gathered between the phone number, voice usage and transaction patterns. Knowing that a customer fills up a tank on Friday evenings or shops for groceries on Saturdays adds a layer of insight that pure transaction data cannot provide. However, the value of that insight evaporates if the customer migrates to an operator‑owned platform that offers cheaper data and integrated financial services.
Banks have already felt the pressure elsewhere. Since 2017, Standard Bank has shed 42 % of its branches, while Absa, FNB and Nedbank have collectively decommissioned thousands of ATMs. Capitec, by contrast, is expanding its physical footprint to capture the low‑income, first‑time user segment – the same demographic that MoMo and VodaPay chase through connectivity‑driven offers.
The deeper irony of the banking MVNO model
The original purpose of the banking MVNO was to protect banks from operator‑driven financial services. Yet the defence was built on infrastructure owned by those very operators. Over the past decade, those operators have turned that reliance into an advantage, scaling fintech platforms that are data‑first, cost‑efficient and tightly integrated with their own networks. Meanwhile, banks remain tethered to a model that still relies on voice‑centric relationships and pays for data usage to a competitor.
The contest now plays out at the margins – data pricing, app zero‑rating and the ability to bundle financial services with unlimited data. Operators have the levers to push those margins in their favour, while banks can only hope that behavioural insights will keep customers loyal enough to absorb the higher costs.
The road ahead for South African banks is clear: either renegotiate wholesale agreements to level the data‑cost playing field, or consider building their own network assets – a costly endeavour that may be justified if the long‑term erosion of digital banking revenue continues. The phone number was never the prize; it was simply the door. Who controls what lies beyond that door will determine whether the banks can stay a step ahead or become another casualty of the data‑driven convergence war.