OM Bank vs Capitec is about more than banking 

The battle between OM Bank and Capetic in South Africa’s mass market goes beyond banking and into the insurance arena.

Old Mutual has traditionally been dominant in the mass insurance market in South Africa, particularly in funeral insurance. 

This dominance is now being challenged by Capitec, which has rolled out funeral and life cover through its banking app. 

Capitec has taken a significant share away from incumbents in this sector, successfully cross-selling these products to its substantial retail banking client base. 

Banking apps are useful in this regard due to the higher level of customer engagement on the platforms. 

Discovery, for example, notes that its clients engage with its app a few times a month, compared with almost daily activity on its banking platform. 

This opens up more cross-selling opportunities, which Old Mutual has lacked relative to its competitors until it launched its bank to the public in August 2025. 

OM Bank is now establishing itself as a banking entity and is firmly focused on achieving its break-even target in 2028.

OM Bank CEO Clarence Nethengwe told Daily Investor that this is the immediate aim, with his management team tasked with reducing its R611 million loss in the second half of the 2026 financial year.

The bank’s path to profitability relies on continued customer growth and increased client activity through the addition of more products and services. 

On a customer base of 2.5 million, with 36% being active clients by OM Bank’s strict definition, Nethengwe’s model projects the bank will be profitable in 2028. 

This will also require growth in retail deposits to enable an expansion of its lending book to R23 billion. At least R5 billion will be home loans, which OM Bank will launch before the end of 2026. 

The bank is set to cross the one-million-customer mark by the end of September 2026 and is adding 3,000 new clients a day. This matches Capitec’s growth rate. 

Nethengwe said the bank is leveraging all of the group’s infrastructure, tapping into Old Mutual’s 7,245 tied advisors and 357 branches to acquire customers. 

Crucially for the battle against Capitec, the bank is attracting customers from outside of the Old Mutual ecosystem. Half of its signups are new to the group. 

The insurance battle

OM Bank has made no secret of its ambitions to contest Capitec’s heartland of South Africans earning between R5,000 and R80,000 per month. 

In particular, it wants to win over customers earning R50,000 or less per month, which is the segment its mass market insurance business dominates in South Africa. 

This, however, is also the area which Capitec has identified as its next leg of growth, putting the two businesses on a collision course. 

Insurance earnings are highly lucrative for a bank, offering annuity-type income that is capital-light relative to lending activities. 

This has resulted in the reemergence of bancassurance models in South Africa, with insurers launching their own banks. 

OM Bank plans to contest the banking profit pool and use its platform to protect its insurance business from banking competitors. 

“Old Mutual has historically had the biggest market share in the funeral insurance business, and one of the things we want the bank to do is defend our position in that space,” Nethengwe said. 

“This is why we are introducing funeral insurance products onto the banking app and into our branches to recapture some of the share that we have lost.”

Nethengwe is well aware of the challenge posed by the “Stellenbosch-based lender”. He expressed admiration for how it has developed its banking and, in particular, its focus on value-added services. 

In some ways, OM Bank has mimicked this in its own app, as these services are incredibly lucrative, generating fee and commission income. 

“In the next six months, we should complete the core banking rollout and then add insurance more broadly beyond funeral cover,” Nethengwe said. 

“We will pilot it in the first half of next year and by early 2028, we should have a full offering from an insurance perspective.”

“We are not looking at it from a transactional banking product only, but as a full financial services suite. When we got that licence, it was with becoming a full provider in mind.” 

Nethengwe faces a demanding challenge in getting all these pieces to play well together over the next three years. 

Old Mutual CEO Jurie Strydom is setting a high bar for the bank, which is slightly exceeding the company’s expectations for growth and for attracting customers outside the insurer’s ecosystem. 

“We are already moving from establishing that right to win to actually contesting the banking profit pool and turning the bank into a growth engine,” Strydom told Daily Investor. 

“Because we’re driving client acquisition, both new and existing, we are already in a position to talk to customers about our broader proposition, so you know it’s very much our strategy to start cross-selling immediately.”