The Reserve Bank’s Prudential Authority has given financial services group Old Mutual the go ahead to establish a bank, which is expected to compete with established players, particularly the likes of Capitec.
Old Mutual said on Friday the regulator had approved its application subject to certain conditions.
“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. We can confirm that the launch is on track,” says Old Mutual CEO, Iain Williamson.
He added that the next steps will include integration testing and connecting to the National Payments System.
Seven years ago, Old Mutual 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.
Williamson said the group continues to benefit from its customer-focused approach. This is reflected in its 2023 financial results which shows that the value of new business accelerated 37%, with both gross flows and gross written premiums increasing by 14%.
The CEO said this gives its banking proposition a good foundation.
“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.
Old Mutual is building the bank through digital-led functionality and will primarily service upper-mass-market and lower-affluent consumers (customers earning R5,000 to R80,000 per month).
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 last week, 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.”
SA’s banking industry has not been short of new entrants with the likes of TymeBank, Discovery bank having made a foray in the highly competitive sector — regarded as one of the well-regulated in the world.
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