Old Mutual’s bank one step closer to Capitec battle

OM Bank has received approval from the South African Reserve Bank’s Prudential Authority to appoint Clarence Nethengwe as CEO. 

Nethengwe’s appointment as the country’s newest bank’s CEO is effective immediately, Old Mutual announced on Thursday, 30 January. 

OM Bank will launch with a select group of clients in early 2025, ahead of a broader public rollout later in the year, the insurer said in a statement. 

The bank will offer a range of personal banking solutions, including transactional accounts, savings, and credit products. 

Old Mutual Group CEO Iain Williamson noted the importance of Nethengwe’s role for Old Mutual and consumers, given the board’s vision for the bank.

Williamson explained that the bank’s launch is a crucial component of the Group’s Integrated Financial Services (IFS). 

Nethengwe has significant work ahead of him to launch the digital-first bank to consumers in 2025, Williamson said.  

Since 2009, Nethengwe has built one of Old Mutual’s largest and most successful businesses, the Mass and Foundation Cluster (MFC). 

This cluster is the target market for the bank’s offering, with it seeking to take a slice of the middle mass market made up of South Africans earning between R5,000 and R80,000 per month.

Capitec has long dominated this segment of the market, and Williamson has made it clear that the insurer is aware of the intense competition in South Africa’s banking sector. 

The bank has also greatly increased its presence in South Africa’s funeral insurance sector, which Old Mutual has historically dominated.

With Capitec’s ability to cross-sell this product to its 23 million banking clients, it has made significant strides in this sector.

This has led some analysts to speculate that Old Mutual’s banking offering is intended to help the insurer protect its insurance businesses by giving it direct access to clients to which it can cross-sell its products.

Old Mutual already has a significant finance business, which has a lending book worth R16 billion and around 400,000 clients using its Money Account, facilitated by Bidvest Bank. 

Given its extensive banking operations, he described it as a “no-brainer” for Old Mutual to launch a bank. 

“Our unsecured lending book is sitting at R16 billion. We have about 400,000 active transactional account users in our transactional banking solution, which we do under Bidvest,” he said. 

Old Mutual also offers a home loan product with SA Home Loans. “We have a lot of the components of banking. We have not brought those things together in one cohesive entity yet.”

Williamson said the bank would be highly digital but also complemented by Old Mutual’s extensive physical branch network. 

“We have had a team building the digital infrastructure of the bank for the past two and a half years. That is now all finished.”

“So, we have all the infrastructure required to run and support the bank from a technology perspective, all the call centre technology, and core banking systems.” 

“What we need to finish up is to conclude the constitution of the board to oversee the bank and the executive team to run the bank that regulators are comfortable with, given our history as a non-banking financial institution.” 

Once that is completed, the bank will be launched alongside a new app that has already been developed. “The intention is for that to be early in the new year,” Williamson said.