Artificial intelligence (AI) will play an important role in Old Mutual’s banking unit — scheduled to start operations in 2024 — particularly in driving down bank charges, the group’s chair Trevor Manuel said.
Writing in the financial services group’s annual report that was published on Friday, Manuel said the bank build is a core component of the group’s integrated financial services ecosystem.
“This ecosystem will be further enhanced with the launch of our new bank in 2024, which should accelerate the integration of Old Mutual’s financial services.
“The bank’s use of AI is expected to dramatically speed up processes, keep operating costs and bank charges low, and facilitate the development of convenient and relevant new financial offerings.”
Banks worldwide are adopting generative AI, which promises earnings growth, improved decision-making and better risk management. But S&P Global Ratings has warned that AI also comes with new risks, concerns and costs that banks will have to manage.
One of the risks flagged by S&P is ethical concerns, such as the ability to explain generated content or biases embedded in data. Other AI risks that are particular to the banking sector include security and privacy, as well as issues related to workforce displacement.
Standard Bank, Africa’s largest lender by assets, will in 2024 explore the deployment of AI in its operations.
It is not looking to be a pioneer in the space, but is positioning itself to be a “fast follower’’.
Old Mutual said it is building the bank through a digital-led functionality and will primarily service upper-mass-market and lower-affluent consumers (customers earning R5,000 to R80,000 per month).
“We have existing lending and transactional solutions in SA, consisting of our Money Account and an unsecured lending product. Our current transactional solution is delivered through a commercial arrangement with a third-party bank. Securing our own banking licence allows us to hold the primary relationship with our customers,” the group said in the annual report.
“Our core banking platform is being built using the latest, cloud native technology provided by 10x Banking. Building our bank from the ground up, using the latest available technologies, allows us to differentiate in the context of the SA retail banking landscape.”
Old Mutual seven years ago announced the unbundling of its majority shareholding in Nedbank to its shareholders, marking a total distribution to Old Mutual shareholders worth about R43.2bn and the completion of Old Mutual Group’s managed separation.
The group, the country’s biggest insurer after Sanlam, in 2022 announced its intention to own its own bank and applied for a banking licence.
The group said its section 16 submission for the bank build was completed and submitted early in 2024. It is awaiting approval from the Prudential Authority.
“Our bank build in SA represents a critical component of delivering on our integrated financial services business of the future. An enhanced transactional banking capability allows us to partner with our customers, while generating new revenue streams for the group. We remain on track and within budget with our bank build,” CEO Iain Williamson said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.