South Africa getting a new bank this year

Old Mutual is set to launch its standalone bank to the public before the end of 2025. It has met all the regulatory requirements and is in a trial period with 600 employees. 

This was revealed in the insurer’s annual results for the year ended 31 December 2024, in which it posted its highest profit since 2019 and headline earnings of R6.69 billion, up 14% year-on-year. 

The strong result was driven by increased demand for its short-term insurance product, lower claims, and the improved performance of its asset management business. 

Old Mutual is also beginning to reap the rewards of its plan to drive operational efficiencies and reduce its cost base to ensure long-term profitability. 

Despite these measures, the insurer has invested heavily in building out its new bank, which it expects to be fully functional by the fourth quarter of the year. 

Old Mutual has met all the remaining Section 17 conditions and received regulatory approval for the appointment of its CEO and the bank’s board of directors. 

“These appointments will oversee the execution of our gradual and risk-based customer acquisition strategy that will culminate in a full national rollout by the fourth quarter of 2025,” the insurer said. 

This month, the bank received Prudential Authority approval for its banking licence as it has met all regulatory requirements. 

“The launch of OM Bank in  South Africa is a material catalyst to our strategic delivery journey and a concrete realisation of our strategic ambition to build an integrated financial services business.”

The insurer has spent R2.8 billion since 2022 building out the bank and securing the retail banking licence. 

This is not the only cost the insurer will have to absorb. It anticipates an annual loss run rate of between R1.1 billion and R1.3 billion. 

It assured investors that this will reduce over time as revenue is generated, with the bank reaching breakeven in 2028. 

“Our next key milestones include a phased approach to customer acquisition, integrating the Old Mutual Rewards Programme and positioning OM Bank to reach breakeven in the medium term.” 

The insurer knows that banking in South Africa is a highly competitive space and plans to leverage its existing insurance customers to drive growth. 

Crucially, the launch of its bank will also enable Old Mutual to cross-sell its investment and insurance products to its clients through an app. 

Traditional insurance apps, while costly to set up, are used far less by clients than banking app, making them ineffective platforms to cross-sell products. 

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

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 before being rolled out nationwide.