Old Mutual Receives Approval to Establish Bank in South Africa

Old Mutual, a leading African financial group, receives approval to establish OM Bank, a new retail bank in South Africa, aiming to target the mass market and enhance its integrated financial services offerings.

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Mazhar Abbas
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Old Mutual Receives Approval to Establish Bank in South Africa

Old Mutual Receives Approval to Establish Bank in South Africa

Old Mutual Limited, a leading African financial services group listed on the Zimbabwe Stock Exchange, has received regulatory approval from the Prudential Authority in South Africa to establish a fully-fledged bank. This approval, granted under Section 17 of the Banks Act, indicates a notable development for Old Mutual in its strategic plan to build an integrated financial services business and become a one-stop shop for its customers' financial needs.

The new bank, to be called OM Bank, has completed its infrastructure and digital platform build and is now conducting integration testing to connect to South Africa's national payments system. Old Mutual aims to launch OM Bank before the end of 2024, with plans to target the mass retail banking market currently dominated by Capitec.

Old Mutual has already spent R1.75 billion to build its core banking system and committed an additional R800 million to continue building out OM Bank ahead of the planned launch. The group will now transition from the 'bank build mode' and enter a strict and rigorous industry testing phase with selected bank partners before fully integrating the new bank into the National Payments System.

Why this matters: The establishment of OM Bank constitutes a significant development in Old Mutual's strategic delivery journey, accelerating the fulfillment of the group's goal to build an integrated financial services business. This move will strengthen Old Mutual's position as the first choice for customers to sustain, grow, and protect their prosperity, while also providing a cheaper source of funding through retail deposits.

Old Mutual CEO Iain Williamson expressed excitement about the approval, stating, "This approval to establish a bank is a material catalyst in our strategic plans as it accelerates the fulfillment of our stated strategic choice to build an Integrated Financial Services business and strengthen our position as the customers' first choice to sustain, grow and protect their prosperity."

The new banking capabilities will enhance Old Mutual's ability to regularly interact with customers and partner with them earlier in their life journeys. OM Bank will initially focus on luring banking clients from Old Mutual's existing 3.1 million customers in its Mass and Foundation business cluster, which serves low-income and lower-middle-income individuals.

The approval for Old Mutual to establish OM Bank comes amid the planned launch of several other new banks in South Africa, including the Young Women in Business Network (YWBN

Key Takeaways

  • Old Mutual received regulatory approval to establish OM Bank in South Africa.
  • OM Bank aims to target the mass retail banking market, dominated by Capitec.
  • Old Mutual has invested R1.75 billion to build the core banking system for OM Bank.
  • OM Bank will enhance Old Mutual's ability to interact with and serve its 3.1 million customers.
  • The approval comes amid the planned launch of several new banks in South Africa.