South Africa’s new bank and its fight against Capitec

Old Mutual’s OM Bank will launch later this year and target Capitec’s largely uncontested target market. Old Mutual has already begun competing with Capitec in the mobile virtual network operator (MVNO) market.

OM Bank is set to launch publicly in the fourth quarter of 2025, following a soft launch with select customers in the second and third quarters of the year.

While it hasn’t named its main rival directly, it hasn’t hidden its ambitions to go after Capitec’s client base.

It will target the upper mass market and lower affluent customers, meaning it will directly compete with Capitec.

Capitec’s formula has been highly successful. Founded in 1997 by Michiel le Roux, its operations have been largely uncontested in South Africa. It has also been the country’s best-performing share since 1994.

Its client base has grown from around 25,000 to more than 22 million, and its share price has grown from R0.55 when it was listed in 2002 to R3,032.91 today.

Although it originally planned to launch before the end of 2024, and then in Q1 2025, OM Bank faced some delays and is now targeting a public launch in the fourth quarter of 2025.

In January 2025, the South African Reserve Bank’s Prudential Authority approved Clarence Nethengwe’s appointment as CEO of OM Bank, giving the bank the green light to launch.

In a statement regarding the approval, OM Bank said it is targeting a soft launch for a limited number of customers in Q2 and Q3 2025 before moving to launch publicly.

OM Bank announced Nethengwe’s appointment in September 2024, targeting 1 November 2024 as the date he will take over the CEO’s responsibilities.

After its public launch, OM Bank will run a campaign to convert Old Mutual money account holders to OM Bank customers.

The bank’s launch has been a long time in the making. It filed its Section 16 application with the Prudential Authority and received approval to launch in April 2024, two years after Old Mutual secured its banking licence.

“We are extremely pleased to have received the regulator’s go-ahead and look forward to shaking up the financial services space with new innovations and solutions,” said outgoing Old Mutual CEO Iain Williamson.

Old Mutual believes the move to launch a bank offering transactional banking services will help it engage with customers more regularly.

It said that its customer-centric approach accelerated the value of new business by 37% in 2023, and it hopes to build on that through OM Bank.

“This robust performance, together with the approval to launch a bank, affirms our progress in building the integrated financial services business of the future,” said Williamson.

He added that accepting retail deposits through a bank will provide a more affordable funding source.

The bank is built on 10x Banking’s cloud technology, which Old Mutual said enables it to offer personalised, affordable, and flexible services. It hopes to become profitable within three years.

Old Mutual launches an MVNO

In addition to the Bank, Old Mutual has announced a mobile virtual network operator (MVNO), which it believes will support its customers’ experience with OM Bank.

“Affordable data and connectivity are critical for our customers to fully participate in the mainstream economy and an important enabler for our customers to transact with all propositions digitally, including OM Bank, when we launch,” it said.

Old Mutual Connect customers can get a SIM card from an Old Mutual branch, and prices start from R5.

MyBroadband tested the MVNO and noticed that its data prices are almost identical to Capitec Connect’s. Like Capitec, it also runs its service on Cell C’s MVNO platform.

Capitec Connect lets customers buy data with airtime at a competitive out-of-bundle rate of 4.5 cents per megabyte or R45 per gigabyte. At launch, Capitec Connect’s main draw was that the data doesn’t expire.

While this offered excellent value for users consuming 1GB or less per month, it was underwhelming compared to traditional mobile networks and other MVNOs for users consuming 5GB or more per month.

To address the issue, Capitec launched 2GB, 5GB, and 10GB bundles.

Old Mutual offers similar starting prices to Capitec. However, its offerings are only available as bundles that customers must buy.

Its prices for 5GB bundles and lower appear to be calculated on a flat 4.5 cents per MB basis.

Whether you buy 30MB or 5GB, your effective data rate remains 4.5 cents, meaning there is no real incentive to buy data in higher allocations.

However, Old Mutual does offer a 10GB and 20GB data bundle at compelling prices.