OM Bank, Old Mutual’s banking offering, will not roll out ATM machines across the country, but will be entering into partnerships with retail outfits to make its services available to consumers.
The bank marks Old Mutual’s re-entry into the banking sector after its disinvestment from Nedbank in 2018 as part of the group’s managed separation.
OM Bank CEO Clarence Nethengwe, whose appointment was recently approved by the SA Reserve Bank’s prudential authority, said interpreting data from consumers would be key in growing the bank, which was expected for public launch later this year.
“One of the things we will be doing is to look at data in real time to understand what people are doing with their money, and how they engage with the app. Product development is something that will happen very rapidly,” Nethengwe said.
“The reason Old Mutual has started a bank is for the bank to be the centrepiece in terms of execution of the group’s integrated financial services strategy. Banks from an interaction perspective are unmatched,” he said. “Because of the daily interaction with customers, we will generate a lot of data that will inform us on trends and consumer behaviour.”
Mining and understanding data has been a key aspect in the success of Capitec — which has grown its customer base to 23-million — making the lender the biggest bank in SA by customer numbers.
The Stellenbosch-based bank has accumulated more than 2-trillion data points that it uses to create value beyond banking, through its three businesses, retail banking, business banking and insurance, as it implements its strategic initiatives.
SA has over the past decade not had a shortage of new banks coming on to the scene to compete with the country’s mainstay lenders — FirstRand, Nedbank, Standard Bank and Absa. In particular, the industry has seen the entry of several digital-only players such as TymeBank and Discovery Bank.
OM Bank is also pursuing the digital-only strategy, which naturally leads to low-cost banking.
Nethengwe said he was confident OM Bank would hold its own in the highly competitive market, saying the cost of acquiring clients is attractive.
“Yes, the bank does not have a life insurance licence or short-term insurance licence. But within the group, we have those licences. We will be able to help customers take up all offerings in the group to meet their needs,” he said. “For a shareholder, the cost of acquisition of customers is very low.”
You won’t see any of OM Bank’s ATMs. Our customers will have the ability to withdraw and deposit cash at retail. Our customers will also be able to use other banks’ ATMs.
— Clarence Nethengwe, OM Bank CEO
The Old Mutual group has over the past few years launched products that give it a better sense of consumer behaviour.
The group in October launched a mobile virtual network operator (MVNO) service offering competitive mobile services designed to meet the needs of today’s dynamic and connected world.
In 2023, Old Mutual launched O’mari — which offers mobile money services, insurtech, investech, digital lending, e-commence, payments and digital products and services for the retail mass market in Zimbabwe.
OM Bank has opted not to roll out ATMs, keeping to the digital feel of the bank.
“You won’t see any of OM Bank’s ATMs. Our customers will have the ability to withdraw and deposit cash at retail. Our customers will also be able to use other banks’ ATMs. The incentive is to do transactions with retailers. Customers will be able to use their virtual cards to withdraw cash at retailers,” Nethengwe said.
Business Day reported in January that a Reserve Bank working paper calls for policymakers to expand the network of licensed agents working with banks to facilitate transactions beyond retail stores as a means of deepening financial inclusion.
The working paper says authorities could also consider dealing with the barriers to the adoption of agency banking to absorb more marginalised people into the mainstream banking system.
Agency banking in SA amounts to licensed third-party retail distribution channels such as retail stores and supermarket chains. SA lenders use the network of retail chains to expand their reach to underserved communities.
Alliances between banks and retailers include a partnership between Absa and Pep stores, TymeBank and Pick n Pay, Boxer and The Foschini Group (TFG).
The basic financial services facilitated through agency banking range from cash-in services (cash deposits, funds transfers and bill payments) and cash-out services (cash withdrawals and payment receipts) to opening new transaction accounts, such as Shoprite and Pick n Pay money market accounts.
Studies have shown that agency banking via retail stores has become the preferred distribution channel for South Africans after ATMs.
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.