South Africa’s new bank one step closer

Old Mutual has taken a massive step forward in creating a new bank in South Africa by getting Section 17 approval to establish a bank.

Old Mutual announced today that, following a stringent regulatory review of its application in terms of Section 16 of the Banks Act, the Prudential Authority granted the company approval to establish a bank subject to certain licence conditions.

This approval, in terms of Section 17 of the Banks Act, allows Old Mutual to proceed to the next critical stage in the process of establishing a bank. 

The company will now formally transition from ‘bank build mode’ and enter into a strict and rigorous industry testing phase with selected bank partners. 

Upon successful, error-free testing, the new OM Bank will fully integrate into the National Payments System.

“The approval to establish a bank is a material catalyst in our strategic delivery journey,” said COE Iain Williamson. 

“It accelerates the fulfilment of our strategic choice to build an Integrated Financial Services business and further strengthens our victory condition to be our customers’ first choice to sustain, grow and protect their prosperity.”

Old Mutual’s bank is set to be launched before the end of 2024, following a bank build of around two years. It will target the upper mass market and lower affluent consumers.

This was revealed in the insurer’s annual report for its financial results for its 2023 financial year, where it produced strong results.

In a media briefing following the release of the company’s results, Williamson provided an update on the company’s plans to launch a bank. 

The South African Reserve Bank’s Prudential Authority approved the company’s application for a banking licence in November 2022. 

The group already has existing lending and transactional solutions – an unsecured lending product and the Old Mutual Money Account – with the latter handled through a partnership with Bidvest Bank.

Old Mutual said the unsecured lending solution, in particular, is already a strong contributor to group profitability.

“Establishing a bank within the group will allow us to maintain a primary relationship with our customers, driving greater regular interaction with them and enhancing cross-sell opportunities across the group,” the insurer said. 

“It will also enable the group to accept retail deposits, thereby providing a cheaper source of funding.”