New bank taking on Capitec launching in 2025

Old Mutual is entering the digital banking space with OM Bank, which it plans to launch in the first quarter of 2025.

The bank received regulatory approval in April 2024 and hoped to launch by the end of the year. However, Reuters reported in September 2024 that the bank was now targeting a Q1 2025 launch.

The bank said the technical and operational progress behind its development was ahead of schedule, adding that it had already completed industry testing and integration into the National Payments System.

Following a public launch in Q1 2025, OM Bank will launch a campaign to convert existing money account holders and reach full-scale operations by the end of 2025.

OM Bank received the Prudential Authority’s approval in April 2024, just two years after Old Mutual received its banking licence.

It indicated that the next steps would include integration testing and connecting to the National Payments System, the processor for which was regulated under industry standards.

Regarding the motivation behind Old Mutual’s move into consumer banking, it believes adding transactional banking capabilities will enable regular customer interaction.

Moreover, Old Mutual’s customer-centric approach accelerated the value of new business by 37% in 2023, and It hopes to improve this through OM Bank.

The bank is built on 10x Banking’s cloud technology, which Old Mutual says enables it to offer personalised and flexible services at affordable rates.

It also believes that accepting retail deposits through a bank will provide a more affordable funding source.

OM Bank targets the upper mass market and lower affluent customers. It will compete directly with Capitec, which has been recognised as South Africa’s best-performing share since 1994.

Founded in 1997 by Michiel le Roux, the bank has been largely uncontested until recently.

Capitec’s client base has grown from around 25,000 to more than 22 million clients, and its shares have grown from R0.55 per share when it first listed on the JSE in 2002 to over R3,300 during 2024.

Despite the potential threat posed by OM Bank and other players like TymeBank, Capitec CEO Gerrie Fourie isn’t overly concerned.

He said large international brands like Apple and Meta present a greater threat.

“Old Mutual has been a bank for quite a while. They rented a bank license. So, the offer has been exactly the same — they’ve been offering banking services,” said Fourie.

“They are now just getting their own banking license and their own banking system.”

However, brands like Apple have strong trade names and would severely disrupt the local banking sector if they offered full banking.

“If they come into South Africa with full banking, that’s a strong proposition,” said Fourie.