New bank taking on Capitec officially launches in South Africa
South Africa officially has a new bank, with OM Bank set to operate in the mass market segment, which Capitec dominates.
OM Bank is owned by insurance giant Old Mutual, which couldn’t share a new one due to regulations.
After a soft launch earlier this year, the bank is now officially open to the public. Money Account clients are now being switched over to the new banking app.
An email sent to clients asked them to download the new OM Bank app and outlined steps for customers to transfer funds from their Money Account.
“Old Mutual’s new banking offering, OM Bank, is live. As a valued customer, you’re among the first to be eligible to sign up to this new banking offering, ahead of everyone else,” the email said
Money Market Accounts will remain active until the end of 2026, after which transactions will be disabled. “You can move your funds to OM Bank beforehand or to explore other options,” the email said.
The Money Account product operates as a transactional banking account with a savings option and is administered through Bidvest Bank.
Bidvest Bank is undergoing a massive change, and it looks set to be taken over by Nigeria’s Access Bank.
Old Mutual has spent just shy of R3.0 billion since 2022 in building its bank. It secured a banking licence in early 2024.
The bank is expected to post an annual loss rate of R1.1 billion and R1.3 billion, before becoming profitable in 2028.
Clarence Nethengwe has been appointed as the OM Bank CEO and was previously the Managing Director of the group’s Mass and Foundation Cluster.
The bank’s board of directors was also recently appointed, and Nomkhita Nqweni was named the inaugural chairperson.
Old Mutual plans to leverage its existing customer base, trusted brand and expansive distribution network to grow the bank. It also plans to cross-sell investment and insurance to customers via the app.
The bank is adopting a digital-first approach, similar to Tyme Bank, Discovery Bank, and Bank Zero, which have no bank branches.
Coming after Capitec
The bank will primarily focus on the mass retail market, which Capitec dominates.
Capitec is South Africa’s largest bank by customers, with the group sitting at just below 25 million customers. It also took FirstRand’s title as the most valuable bank in South Africa earlier this year.
Although OM Bank will battle Capitec in a new format, former Capitec CEO Gerrie Fourie noted that the group had already competed for several years across their micro-lending businesses.
Capitec may seem like a monumental operation to overcome, but investors believe the bank can offer good value to the Old Mutual Group.
Mark du Toit from OysterCatcher Investments said that turning OM Bank from a loss-making entity into a profitable one will help further the group’s growth.
The new venture is also not Old Mutual’s first foray into the world of banking, as it was the majority shareholder of Nedbank, one of the traditional “Big Four” banks, a decade ago, before exiting its stake.
Loading ...