OM Bank: Old Mutual gears up to revolutionise digital banking in South Africa
OM Bank, a new digital banking venture by Old Mutual, is poised to enter South Africa's competitive banking sector.
After receiving final approval from the South African Reserve Bank's Prudential Authority in 2024, the bank is on track for a soft launch to a small group of clients in the second quarter (Q2) of 2025, with a broader public rollout anticipated in the third quarter (Q3).
'Through this transformative, digital-first banking experience, we want to empower ordinary South Africans with transparent, accessible, and fairly priced solutions contributing to their financial wellbeing," said Old Mutual Group chief executive Iain Williamson.
Positioned to enter the competitive retail mass market, OM Bank aims to challenge current market leader, Capitec, which has demonstrated significant growth, boasting a market capitalisation of approximately R360.74bn as of February 2025.
Targeting South Africans earning between R1,000 and R30,000 per month, OM Bank aims to provide accessible digital banking services. Leveraging Old Mutual's extensive customer base, the bank plans to cross-sell its products, offering transactional accounts, savings, and credit solutions.
This is according to Clarence Nethengwe, OM Bank's chief executive officer and Nomkhita Nqweni who was appointed OM Bank's chair last week.
Strong earnings growth
In line with this strategic growth, Old Mutual's investment in its new bank, OM Bank, has impacted its results for 2024, but the group still expects a massive jump in headline earnings.
In a trading statement for FY2024, Old Mutual announced that its headline earnings are projected to rise 10% to 30%, reaching between R8.1bn and R9.5bn for the 2024 financial year.
Additionally, Old Mutual reported a 38% rise in half-year profit for the period ending 30 June 30, 2024, with headline earnings per share increasing to 133.6 cents from 96.8 cents in the previous year. Adjusted headline earnings per share also saw a 7% increase.
The group attributed the increase in headline and basic earnings per share to its share repurchase programme. Strong performances from Old Mutual Insure, Wealth Management, and Old Mutual Investments also contributed to the solid results. However, lower profits in Personal Finance and the group's investment in OM Bank partially offset this.
Banking on the competition
Old Mutual applied for a banking license in 2022. On 19 April 2021 it was announced that, after a thorough regulatory review under Section 16 of the Banks Act, the Prudential Authority had approved the bank's establishment, subject to certain licensing conditions.
By September 2023, OM Bank had successfully completed industry testing and integrated into the National Payments System. As a result, it will compete against the big five lenders, including Absa Bank, FirstRand, First National Bank and Standard Bank. It will also compete with digital banks such as Discovery Bank, which was launched in 2021.
"We acknowledge the existence of the competition...and we believe that we are well set up to both compete and to thrive," Williamson said.
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