The top brass at OM Bank are confident the fledgling lender will hit the ground running when it officially opens next month after a robust soft launch that snapped up about 5,000 clients a day.
The bank, which is targeting the mass market where Capitec commands a strong position, said it was encouraged by the demographics of the clientele it is attracting, with a sizeable proportion of them younger than 25.
OM CEO Clarence Nethengwe used the Old Mutual group’s capital markets day on Tuesday to underline the bank’s prospects, saying it was poised to disrupt the mass market and be a significant player in the sector.
“We are a low-cost operation. Cost management is absolutely critical in terms of how we do things. We have designed the bank to have not more than 550 employees. We have anchored the bank on technology and data,” Nethengwe said.
“We are customer obsessed. We can’t win against the big boys if we are not obsessed. We are going to leverage all the distribution channels in the Old Mutual ecosystem, and we are going to win as a result of that.
“We know the customer base that we are targeting. This is traditionally our stomping ground, and we are going to make sure that we play to win in that space.”
That stomping ground includes Old Mutual’s millions of customers in SA.
“The initial priority will be to migrate the Old Mutual customers and accelerate our growth in terms of the 7-million [Old Mutual customers] we have,” Nethengwe said, adding that the lender would use Old Mutual’s vast branch network to win over clients.
Value-added services, competitive fees and cross-selling opportunities between the lender and Old Mutual will be at the heart of the bank’s value proposition.
OM Bank heralds Old Mutual’s re-entry into the sector after its disinvestment from Nedbank in 2018 as part of the group’s managed separation.
The group’s banking sequel comes while SA is experiencing a rapid convergence of banking, insurance and telecommunications.
OM Bank is targeting clients earning between R8,000 and R80,000 a month but has its work cut out in seeking to dominate the mass market.
Capitec is the market leader, having amassed more than 25-million customers. It has also grown into SA’s largest digital bank, with more than 12-million of its client base using its app.
OM’s entry to the market comes as Capitec experiences a surge in clients who earn more than R50,000 a month, indicating that the lender’s appeal is spreading.
Last month, Capitec reported that the number of customers earning more than R50,000 a month had increased by 24% in the six months to end-August.
The Stellenbosch-based lender now has 12-million clients aged 16-35, which is a 58% share of the segment.
Old foes, new terrain: Sanlam and Old Mutual lock horns
Old Mutual’s re-entry into the banking sector also coincides with insurance rival Sanlam stepping up its presence in the banking space via its partnership with TymeBank.
Sanlam is building a “super app” that incorporates all the group’s capabilities and will include transactional banking facilities.
The app is being built in collaboration with TymeBank, soon to be renamed GoTyme in SA. The app will have various capabilities, with users being able to transfer money, pay bills, buy electricity and data, and apply for credit, among other functions.
Sanlam is also set to revamp its loyalty programme by combining the different loyalty strands across the group into one offering. This will also be integrated into the app, which is scheduled to be launched in the first half of next year.
TymeBank has grown to more than 11-million customers since going to market in 2019.
Traditional players look offshore and to fintechs
With new digital banks competing strongly for the retail banking pie, traditional banks — which still hold a commanding position — are increasingly looking for growth in their other African operations.
FirstRand on Wednesday announced the purchase of Standard Chartered’s Zambian wealth and retail businessesfor an undisclosed amount.
Earlier this week FirstRand bought 20% of AI-powered fintech group Optasia, which is preparing to list on the JSE in the coming weeks.
FirstRand is looking to bolster its exposure to new business models and technologies such as AI in the world of lending to open new markets and gain it a broader base of customers.
Absa last week sealed its first major acquisition under new group CEO Kenny Fihla with the purchase of Standard Chartered’s wealth and retail banking businesses in Uganda for an undisclosed amount, a huge leap in the group’s plan to grow its East Africa business.
The FirstRand and Absa transactions come a year after UK-based Standard Chartered laid out plans to exit its wealth and retail operations in Botswana, Uganda and Zambia to free up capital amid a broad shake-up.
Standard Bank is also reported to be on the prowl for a big acquisition in Kenya.
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