South Africa’s new bank — and its fight against Capitec

Old Mutual plans to launch its new bank before the end of 2024. It will target the upper mass market and lower affluent customers who earn between R5,000 and R80,000 per month.

This is the segment where Capitec has seen tremendous success, rapidly growing to serve over 20 million customers since its launch in 2001.

When Old Mutual received its banking licence from the Prudential Authority in 2022, it said it planned to break even in three years.

Built from the ground up using 10x Banking’s cloud technology, Old Mutual said this would let it offer customers personalised, cost-effective, and flexible services.

It said building a bank is central to its plan to become a fully integrated financial services ecosystem and the primary touchpoint for its clients.

In addition to allowing it to hold the primary financial relationship with its customers, Old Mutual said that having a bank that accepts retail deposits would give it a cheaper source of funding.

Old Mutual received approval from the Prudential Authority to launch OM Bank in April 2024 after filing its section 16 submission earlier this year.

In March, Old Mutual CEO Iain Williamson explained that the submission required its banking systems and processes to be independently verified in a working end-to-end scenario.

With this approval, it can now exit “bank build mode” and begin a rigorous industry testing phase with selected bank partners.

Once it has passed the tests, OM Bank will fully integrate into the National Payments System.

Williamson previously said this integration will take around three months once approval is given. Only after this integration can the bank be tested end-to-end.

“It is a long process, but we are on track to deliver an operational bank by the end of the year,” he said.

Williamson said the bank build was completed within its initial budget of R1.75 billion at the end of last year.

MyBroadband asked Old Mutual about its plans for OM Bank and what to expect from the technology they were deploying. It did not provide feedback by publication.

Gerrie Fourie, Capitec CEO

Capitec CEO Gerrie Fourie said he is far more concerned about the competition that international brands like Apple and Facebook could bring to South Africa’s banking sector than local market players like Old Mutual.

Fourie told Daily Investor he is unconcerned about Old Mutual entering the market.

“Old Mutual has been a bank for quite a while. They rented a bank license. So, the offer has been exactly the same — they’ve been offering banking services,” he said.

“They are now just getting their own banking license and their own banking system.”

Old Mutual has an unsecured lending product and the Old Mutual Money Account, the latter of which is handled through a partnership with Bidvest Bank.

Fourie said he doesn’t expect Old Mutual’s offering to materially change. However, he believes many international players could disrupt South Africa’s banking space.

“Apple is an unbelievable, strong trade name. And if they come into South Africa with full banking, that’s a strong proposition,” he said.

However, Fourie added that, ultimately, the one who understands the client’s needs the best and delivers on them will be the one who wins.

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South Africa’s new bank — and its fight against Capitec