How Old Mutual plans to beat Capitec at its own game

OM Bank has unveiled how it plans to compete against the country’s biggest banks and take on Capitec in the lower end of the market. 

This plan includes leveraging Old Mutual’s existing insurance client base, its Money Account product, and offering a unique combination of insurance and banking. 

Being able to leverage Old Mutual’s Mass and Foundation insurance cluster, which has over seven million clients in South Africa, gives the bank a strong starting position. 

However, the ability to win over customers from other banks is crucial for OM Bank to succeed, with it estimating that it needs 2.8 million clients to be profitable. Around 1.1 million of these will be completely new to the Old Mutual Group. 

It aims to reach this milestone by the 2028 financial year, with the bank running at an annual loss of R1.1 billion to R1.3 billion until then. 

Specifically targeting South Africans who earn between R8,000 and R80,000 per month, OM Bank is on a collision course with Capitec. 

Winning over clients is not only crucial to make the bank profitable, but is increasingly also seen as a protective move for its insurance business, with banks looking to make significant inroads into the insurer’s core offering. 

Capitec is chief among these, having rapidly grown its funeral insurance business by cross-selling the product to its 25 million clients. 

This is traditionally a stronghold for Old Mutual, but data from the reinsurance giant Swiss Re indicates that Capitec may be winning around 36% of all new funeral insurance policies. 

In this sense, OM Bank is a move from the insurer to protect its insurance business and enable it to cross-sell its insurance and investment products to a wider set of clients. 

For this purpose, a banking app is vital, with clients engaging more regularly and intensely with such an offering compared to relatively low engagement with an insurance app. 

OM Bank CEO Clarence Nethengwe said at the insurer’s 2025 Capital Markets Day that it estimates around 24 times more interactions per client per year through its banking app than alternatives. 

This provides immense opportunities for Old Mutual to use the banking app to cross-sell its insurance and investment products to clients. 

However, it first has to get these clients, with the bank currently onboarding around 5,000 customers a day. It told investors and analysts that it has 140,000 clients after launching just three months ago. 

This rapid growth has been driven by converting existing clients from its Money Account offering and Old Mutual Finance to the bank.

Beating Capitec

Nethengwe outlined OM Bank’s plan to win against the intense competition it faces from incumbents, with it focused on preventing churn among its client base and offering a diverse array of products. 

It was made clear again that the bank is focusing on individuals earning R8,000 per month to R80,000 per month. 

These lines up closely with the insurer’s existing Mass and Foundation Cluster, which targets a similar income segment with insurance offerings. 

Crucially, this alignment allows OM Bank to leverage the Mass and Foundation Cluster’s existing client base of seven million South Africans. 

This will give the bank relatively easy access to millions of individuals within its target market, on top of the 500,000 existing Money Account clients. 

OM Bank also has another crucial headstart on other new banks, with Old Mutual Finance’s R15.5 billion loan book and 346 branches incorporated into the bank. 

Nethengwe, who previously headed up Old Mutual Finance, said the bank is not focusing on an unfamiliar client base, as it already knows the individuals it is targeting through the insurance business. 

This has enabled the bank to build its value proposition around these clients and their needs, giving it an edge over incumbents who target a broader cross-section of South Africans. 

However, even within this narrow cross-section, there are widely different client needs, from everyday banking at the lower end to more bespoke services, such as private banking and advisory services, at the higher end. 

Nethengwe explained the bank is focusing on what all these clients demand, which is a simple, fast, fair, and always-on digital banking offering. 

While OM Bank is a digital bank, it has an extensive physical network through Old Mutual’s existing branch network of 346 branches and 2,200 employees. 

This gives the bank immense reach right out of the gate, with Old Mutual estimating that 3.4 million visits are made to its branches every year. 

It also said that, on average, clients who visit their branches regularly hold 1.25 times more products than those who do not. 

OM Bank can also leverage Old Mutual’s immense financial advisory network to provide higher-end clients with bespoke services in future. 

This gives it an edge over banks looking to expand into insurance, with it able to tap this network to offer more sophisticated insurance products that cannot be sold digitally. 

OM Bank’s plan to win can be seen in the graphic below.