Old Mutual has its eye on the Big Four and Capitec

Old Mutual’s standalone banking offering, OM Bank, is gearing up for a public launch later this year as the company looks to tap into South Africa’s highly lucrative banking space. 

This launch is, of course, not only about getting a foothold in the country’s banking sector, but also about protecting its insurance business and creating an integrated financial services provider. 

CEO Jurie Strydom told Daily Investor that Old Mutual sees the bank performing across both of those vectors in the years to come, with it not settling for mere protection or single-product clients. 

The ‘bancassurance’ model has undergone a revival in recent years, with Discovery launching its own bank, Sanlam becoming ever-tighter with GoTyme Bank, and the country’s largest banks penetrating into the insurance market. 

Standard Bank notably reintegrated Liberty in 2022 to enhance its bancassurance offering, and Capitec launched its funeral insurance offering in 2018. 

FNB has seen its insurance offering grow strongly in recent years, building it out from scratch over the past decade. It now offers a full suite of products across retail and commercial insurance. 

The move from banks into the insurance space, particularly Capitec’s surging growth, has pushed insurers to turn to banking to protect their core business and move on the front foot. 

Banking is highly lucrative in South Africa, with the Big Four of Absa, Standard Bank, Nedbank, and FirstRand (FNB) posting combined headline earnings of R152 billion for 2025. 

However, it is not only about securing a slice of this pie for Old Mutual, Discovery, or Sanlam. South Africans are simply more connected to and active on their banking apps than anything an insurer can provide. 

While the average client may engage with an insurance app once a month, according to Discovery Bank, they interact with their banking app on an almost daily basis. 

This gives banks significant opportunities to cross-sell products into a retail base, lock clients into their ecosystems, and build customer loyalty. 

It also, as insurance does, gives them a vital source of non-interest revenue from activity-based fees and commission income from value-added services and transactions. 

This income is immensely ‘rich’ for banks, as it is not sensitive to interest rates and consumes far less capital than lending. As a result, the earnings are seen as higher quality and generate greater profitability for a bank. 

Strydom is clear that building a bank is not only about acquiring customers for Old Mutual, with OM Bank also serving to deepen client relationships and improve retention across the group. 

The bank is off to a strong start, having acquired over 284,000 customers and R272 million in retail deposits before its hard launch later this year. It is currently acquiring 3,000 customers per day. 

Strydom expects the acquisition run rate to increase significantly once the bank has its hard launch, with it looking to convert around 200,000 more of its existing Money Account customers and enter the banking pool in earnest. 

Old Mutual on the front foot

Strydom is a man on a mission to return Old Mutual to where it belongs among the pantheon of South African financial institutions. 

The 180-year-old behemoth has been left behind by its age-old competitor, Sanlam, and leapfrogged by relative newcomer, Discovery. 

This is despite Old Mutual having enviable scale and an immense balance sheet, with Strydom describing the company as touching every corner of the economy. 

Apart from restructuring the company’s operations to make them more efficient through line-of-sight targets and direct responsibility from cluster leaders for the performance of their businesses, Old Mutual is looking to get on the front foot. 

Its bank is a key part of this. The insurer is no longer just interested in stabilising its business, maintaining its strong position in South Africa’s insurance sector, and making its operations more efficient – it wants to compete and win. 

“OM Bank is, I would say, a very particular opportunity for us to contest that banking pool. So, I would put that in a separate category in South Africa,” Strydom said in an interview following the insurer’s results.

The banking space in South Africa is highly competitive, and Old Mutual is under no illusions as to how difficult it will be to win in that space, particularly as OM Bank appears to be competing head-on with Capitec for customers earning between R5,000 and R80,000 per month.

Strydom said its offering has strong competitive advantages, which will enable it to win in this space, with the potential prize being enormous for the group.

“Our initial competitive advantage is being able to integrate the existing stable of Old Mutual businesses and offer a complete product to clients,” Strydom said. 

“That is mainly for existing Old Mutual customers, but of course, we want to use these banking channels to target new customers and bring more clients into the ecosystem.”

“This will be a natural consequence of forming a really competitive bank, and that is our aim in the long term.” 

OM Bank is as much about growing Old Mutual’s client base as it is about protecting its insurance business by giving it a retail base to cross-sell products into and improve customer retention through increased activity. 

“It is both. You have got to build the bank as a competitive player in its own right. We are taking the approach of first and foremost of contesting that banking profit pool and targeting a new customer base,” Strydom said. 

“But, ultimately, when it is done successfully, it will be a good defence because it will become an integrated platform for the group.”

The Holy Grail for financial institutions is to have an integrated platform through which all of its products and services can be available to clients, with banking apps being seen as the best shot the industry has at success. 

However, Strydom said Old Mutual will always be a business with multiple touchpoints, both physical and digital. 

In this scenario, the bank naturally becomes the integrator of the Old Mutual ecosystem, with all of its products available on the app for clients.