New South African bank targeting Capitec already has 1 million customers and mobile products
Old Mutual Bank (OM Bank), which is taking on Capitec in the banking space, will launch with 1 million customers and access to its own Mobile Virtual Network Operator (MVNO).
Old Mutual unveiled its plans to launch a transactional bank in 2022, and earlier this year, the Prudential Authority granted it approval to begin testing its systems with industry partners.
Independent auditors have also tested its systems internally and ensured its payment channels could function within the National Payments System.
The company recently announced that it had successfully tested its systems with selected industry partners and that they had been integrated into the National Payments System.
Old Mutual CEO Iain Williamson said their new bank is a key priority as part of their strategy to create an integrated financial services business.
He added that pending the remaining regulatory conditions unrelated to technical readiness, they anticipate the public launch in Q1 2025.
“For the rest of the year, we are focused on meeting the remaining Section 17 conditions and continue refining systems and capabilities to ensure a seamless launch,” he said.
Old Mutual built the bank from the ground up using cloud technology from 10x Banking, allowing it to deliver personalised, cost-effective and flexible solutions.
These solutions will target South Africa’s upper mass market and lower affluent consumers, earning between R5,000 and R80,000 monthly.
This is the same market Capitec is serving. This means that OM Bank will compete directly with Capitec to gain market share in this segment.
Capitec has been exceptionally successful, and not many new entrants would want to do battle with South Africa’s largest bank by client numbers.
However, OM Bank has a big advantage. Through Old Mutual’s existing Money Account, it will start with 1 million customers for its transactional banking capability.
Old Mutual also has an unsecured lending business with a book worth R16 billion and a home loan book of over R5 billion. This can be transferred to OM Bank.
The insurer will also leverage the existing 3.1 million low-income South Africans served by its mass and foundation insurance cluster.
This cluster serves low-income and lower-middle-income individuals, who typically earn between R1,000 and R30,000 per month.
Therefore, OM Bank will start with a large client base on excellent opportunities at launch, a luxury which many other new banks do not have.
This explains why Williamson is positive about OM Bank’s prospects despite South Africa’s highly competitive banking sector.
Old Mutual Connect
On 7 October 2024, Old Mutual launched its own Mobile Virtual Network Operator (MVNO) service, following in the footsteps of many other banks.
Old Mutual said it will offer “competitive mobile services designed to meet the needs of today’s dynamic and connected world.”
“We will transform mobile connectivity in the lower segment market by providing customers with unparalleled value in data packages,” it said.
Clarence Nethengwe, managing director of Old Mutual Mass Foundation cluster and CEO designate of the OM Bank, explained the strategy.
He said their new Old Mutual Connect service is a part of our Integrated Financial Services (IFS) strategy to deliver tangible value-added services to their customers.
“Affordable data and reliable connectivity are critical for our customers in the Mass Market to fully participate in the mainstream economy,” he said.
“It is also an important enabler for our customers to interact with the rest of our propositions digitally.”
“Our MVNO will be leveraging a multi-operator core network agreement to deliver reliable and highspeed mobile services,” he said.
Old Mutual Connect will allow customers to get a SIM card from any Old Mutual branch, starting at R5.
Customers can also buy data and airtime from various channels, including at branches, through its partners, and online.
It further promises a simple onboarding process, with assistance to RICA users’ SIM or port their number.
Capitec not too concerned
OM Bank is clearly following the playbook which made Capitec successful, focussing on affordability, accessibility, personal service, and simplicity.
Launching, or at least having access to, a Mobile Virtual Network Operator further duplicates Capitec’s strategy.
However, Capitec CEO Gerrie Fourie said they are not particularly concerned about the imminent launch of OM Bank or other local competitors.
Fourie said Old Mutual has been a bank for quite a while. “They rented a bank license. So, the offer has been the same,” he said.
The only difference is that Old Mutual is now getting its own banking license and banking system.
“What that offer looks like we haven’t seen, but I don’t expect that it will materially change from what they’ve done in the past. So, let’s wait and see what comes out of the banking system.”
Fourie said Capitec has built quite a compelling offer over the past couple of years, and this can be seen in the bank’s results.
Capitec has produced strong results for the first half of its 2025 financial year, with headline earnings surging 36% and return on equity nearing 30%.
The bank had also reached 23.2 million active clients. “Our strong results demonstrate the strength of our diversified business model,” Fourie said.
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