Old Mutual’s Capitec challenger one step closer

Old Mutual has announced the appointment of Nomkhita Nqweni as chairman of the OM Bank Limited board, following approval from the Prudential Authority. 

The insurer also said the regulator had approved the bank’s incoming board and key members of its executive leadership. 

Outgoing CEO Iain Williamson previously said this is the last step on the bank’s journey to its launch in the first quarter of 2025. 

“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,” Williamson said following Old Mutual’s latest results. 

“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.

OM Bank CEO Clarence Nethengwe previously explained that the bank will be launched in multiple phases. It will first be offered to 600 Old Mutual employees and then users of its existing Money Account product. 

This product is currently administered through Bidvest Bank. Old Mutual also offers a home loan product in partnership with SA Home Loans. 

Nqweni’s appointment follows her resignation as an independent non-executive director, effective 24 February. 

Old Mutual said Nqweni has extensive experience in the financial services industry, having worked at Alexforbes and served as CEO of Absa’s Wealth and Investments division for nearly a decade. 

Nqweni will be joined by outgoing Old Mutual CEO Iain Williamson, CFO Casper Troskie, and OM Bank CEO Nethengwe on the board. Other members of the board include –

• June Arogo
• Peter de Beyer
• Amal Desai
• Albert Essien
• Rob Leathers
• Melvyn Lubega
• Arina McDonald

Desai will also serve as the bank’s CFO. The Prudential Authority has also approved OM Bank’s executive team, which will serve alongside Nethengwe and Desai –

• Chief Compliance Officer – Pheona Härtel
• Chief Technology and Data Officer –  Suvania Moodliar
• Chief Risk Officer – Lushendren Pather
• Chief Information Officer – Ray Detereos 
• Chief People Experience Officer – Nomaswazi Ngwane
• Chief Operating Office – Pauline Molloyi (acting)
• Chief Legal Officer – Athena Pavlakis

“The formal approval of the OM Bank Board and key executive leadership will give further momentum to the establishment of OM Bank,” Old Mutual chairman Trevor Manuel said. 

There has been much speculation about Old Mutual’s intention to launch a bank, as the industry is highly competitive and saturated, with around 29 banks operating in the country. 

Old Mutual has been clear that its target market is the middle mass market, which consists of those earning between R5,000 and R80,000 per month.

It has captured a large share of this market in the Mass and Foundation Cluster of its insurance business, where Nethengwe was previously CEO. 

The move is part of Old Mutual’s ambitions to become an integrated financial services provider and is yet another example of the ‘bancassurance’ model proving popular in South Africa. 

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, Williamson has described launching a bank as a “no-brainer” for Old Mutual.

However, the bank’s aim may not be to compete head-on with Capitec but rather to protect Old Mutual’s existing insurance business from disruption.

To this end, the banking platform would give Old Mutual direct access to clients and enable it to cross-sell its insurance and investment products through its app. 

Capitec has stormed into South Africa’s funeral insurance market by offering the product to its 22 million clients through its banking app.

Capitec may take up to 36% of all new funeral insurance sales. 

This is a significant share that poses a major threat to Old Mutual’s insurance business. If Capitec can replicate this success with other insurance products, it can take a substantial chunk of Old Mutual’s Mass and Foundation Cluster. 

Laurium Capital portfolio manager Matthew Pouncett believes that Old Mutual is launching its bank to protect its traditional insurance business and open up new distribution channels. 

Pouncett said insurers starting banking operations in South Africa has been a unique trend, and this is set to significantly disrupt the industry.

He believes Old Mutual’s clear aim in launching a bank is to offer its insurance products directly to consumers in the way Capitec does through its app. 

“The market is yet to see what the full offering entails, but many speculate the launch is largely a defensive move aimed at protecting Old Mutual’s lucrative funeral insurance business,” Pouncett said. 

Operating a bank will also give Old Mutual vital data on the financial behaviour of its clients, enabling it to offer products better suited to its customer base and personalise offerings. 

It can also offer its investment products to consumers through the app, opening up a new distribution channel for its asset management business, which is one of the largest in South Africa.