New South African bank will be here soon

Old Mutual Bank has successfully tested its systems with selected industry partners and has been integrated into the National Payments System.  

Earlier this year, OM Bank was granted Section 17 approval from the Prudential Authority to begin testing its systems with industry partners. 

Prior to this, Old Mutual had independent auditors test its systems internally and ensure its payment channels could function within the National Payments System. 

In its interim results for the half year ended 30 June 2024, Old Mutual revealed that all these tests had been completed, clearing its path for launch before the end of 2024. 

“I am proud of the continued progress in the disciplined execution of our strategy and considered capital allocation,” CEO Iain Williamson said. 

“This has translated into the successful completion of industry testing and integration of OM Bank into the National Payment System in line with the Prudential Authority’s section 17 conditions.”

The insurer said in its results that the South African banking initiative remains a key priority for the company as part of its strategy to create an integrated financial services business. 

The technical and operational progress is ahead of schedule, with successful industry testing and integration into the National Payments System already completed, it said. 

“Pending the remaining Section 17 regulatory conditions unrelated to technical readiness, we anticipate the public launch in Q1 2025.” 

“For the rest of the year, we are focused on meeting the remaining Section 17 conditions and continue refining systems and capabilities to ensure a seamless launch.”

Apart from the delay in launching the bank, Old Mutual also said building out its systems resulted in significantly higher investment. The company allocated R1.3 billion to the bank build for the financial year. 

The bank contributed a net loss to the group of R488 million, with this loss widening significantly from the same period last year. 

The rollout of Old Mutual’s bank appeared to be going smoothly, with the initial bank build being completed within budget and meeting all regulatory requirements ahead of time. 

When initially stating its intention to launch a bank in late 2022, the company planned its launch for the end of 2024. 

However, major changes have occurred at the bank in recent weeks, with it getting a new CEO and COO. 

Earlier this month, Old Mutual announced the resignations of Rolf Eichweber, CEO of OM Bank-Build, and Royden Volans, COO of OM Bank-Build, effective 31 July 2024. 

Both Rolf and Royden will remain in their positions until 31 October 2024 to ensure a smooth leadership transition.

Eichweber was replaced by Clarence Nethengwe, who has been with Old Mutual for 15 years and has overseen the expansion of its lending business in South Africa. 

“The Bank is a crucial part of Old Mutual’s integrated financial services strategy, and Clarence, as the MD of Mass & Foundation, is well-positioned to ensure seamless alignment across the group as we prepare to launch,” Williamson said.  

Consequently, the leadership of Retail Mass will soon be transitioned to a new leader, allowing Clarence to focus on his broader responsibilities.

“The transition from a ‘bank-build’ phase to a ‘bank run’ phase marks an exciting new chapter in our journey.” 

“While we greatly value the immense contributions of Rolf and Royden, we are confident that we have the right skills and leadership in place to take the bank forward and ensure its success.” 

A key focus over the next period is ensuring the OM Bank executive committee has a complement of core skills. As its next growth phase takes off, the bank will ramp up more hires, Old Mutual said.