New South African bank taking on Capitec has over 140,000 customers – before it has even launched

OM Bank has over 140,000 customers using its banking products just three months after it soft-launched in South Africa, with 5,000 clients being onboarded every day. 

This is a strong start for the bank, which is looking to directly take on Capitec in what it calls the ‘middle mass market’. This consists of South Africans earning between R5,000 and R80,000 per month. 

These clients largely correlate with Old Mutual’s Mass and Foundation insurance cluster, where it holds a dominant position in the market. 

Old Mutual is hoping its bank can convert many of these clients over to its platform without much in the way of acquisition costs to accelerate its path to profitability. 

OM Bank’s strong start was most recently outlined by its chief product and innovation officer, Pauline Molloyi, who presented the bank’s story to The Issuer Academy Masterclass. 

Molloyi explained what it takes to build a bank, with a particular focus on how it can be done within an insurer that is 180 years old. 

Fundamentally, these are at odds. Old Mutual’s insurance business is based on physical presence and human connection, while OM Bank is fully digital. 

The bank is leveraging the insurer’s existing branch network of 346 branches in South Africa and its 2,000-strong salesforce. Old Mutual estimates its branches handle over 3.4 million visits a year, a portion of which it hopes can be won over to join its bank. 

This gives OM Bank the enviable position of having an extensive physical footprint on top of which it has built its digital banking offering.

The bank has not had to invest in developing this physical network as many of its peers have, with it having immediate access to an extensive distribution channel to Old Mutual’s existing clients.

This also give the bank a mix of physical and digital from out the gate, enabling it to onboard customers, cross-sell products, and combine offerings with Old Mutual to lock clients into the insurer’s ecosystem. 

Molloyi explained that the bank is predicated on being simple, transparent, and affordable, with a particular focus on removing friction. 

This has proven to be a strong proposition in South Africa, with OM Bank successfully winning over 140,000 clients to its platform in the three months after its soft launch. 

While this is a drop in the ocean compared to the seven million clients the insurer has in its Mass and Foundation cluster, it is a strong entrance into South Africa’s highly competitive banking space. 

Runway to profitability

At its 2025 Capital Markets Day, Old Mutual outlined what it would take for OM Bank to reach profitability and become a sustainable business on its own. 

Currently, the insurer is funding the bank’s operations, with it expected to run at a loss of R1.1 billion to R1.3 billion for the next three years. This comes after Old Mutual has already invested over R4 billion in the bank.

While this is a hefty price tag, building a bank is part of Old Mutual’s plan to become an integrated financial services provider. 

This creates a host of opportunities for the insurer, including the cross-selling of products to its existing clients, a new avenue to acquire customers, and the creation of a full financial services ecosystem. 

Crucially, a banking app is a lot stickier than its insurance counterpart, with customers engaging much more frequently with it. This provides an extremely valuable customer touchpoint for Old Mutual as a group. 

Despite these benefits, Old Mutual plans to make the bank a profitable business on its own, with it set to contribute meaningfully to the company’s bottom line. 

For the bank to break even, Old Mutual estimates that it will need a client base of around 2.8 million South Africans. This accounts for 500,000 dormant customers and 700,000 clients that are not highly active. 

Strangely, the bank only expects to win over one million existing Old Mutual clients to its offering by then, representing relatively low penetration. 

More clients are expected to come from outside Old Mutual, with OM Bank expected to bring 1.1 million fresh clients to the insurer’s ecosystem.

A key part of this is also Old Mutual’s existing Money Account clients, of which there are 500,000. OM Bank expects to fully win over these clients, which sit on R1.5 billion in deposits. 

To reach its target of 2.8 million clients within three years will require an impressive rate of growth, with it roughly matching Capitec’s rate of expansion over the past financial year. 

OM Bank is yet to have a hard launch, with it mainly focusing on winning over Money Account clients and individuals from within Old Mutual’s ecosystem. 

Once it heads into the open blue water, it will have to compete more directly with South Africa’s biggest banks, including Capitec.