Old Mutual Set to Launch Bank Targeting Mass Market and Lower Affluent Consumers

Old Mutual, a leading insurer in South Africa, is gearing up to launch its bank before the end of 2024, following a meticulous build process that has taken approximately two years. Targeting the upper mass market and lower affluent consumers, this strategic move signifies Old Mutual’s expansion into the competitive banking sector.

The revelation was made in the insurer’s annual report for the 2023 financial year, where it showcased strong financial results. During a media briefing following the release of the company’s results, Old Mutual CEO Iain Williamson provided insights into the plans to launch the bank.

Having secured approval for a banking license from the South African Reserve Bank’s Prudential Authority in November 2022, Old Mutual is poised to leverage its existing lending and transactional solutions, including an unsecured lending product and the Old Mutual Money Account.

The establishment of the bank within the group is expected to strengthen customer relationships, enhance cross-selling opportunities, and provide a cheaper source of funding through retail deposits.

Williamson highlighted that the bank build was completed within the initial budget of R1.75 billion, with rigorous independent verification of banking systems and processes. The next phase involves section 17 submission, enabling testing of the National Payments system, paving the way for end-to-end testing.

Old Mutual’s annual report sheds light on the target market, focusing on the upper mass market and lower affluent consumers earning between R5,000 and R80,000 per month. Leveraging cloud technology from 10x Banking, the bank aims to deliver personalized, cost-effective, and flexible solutions to its customers.

The insurer acknowledges the competitive landscape, with Capitec’s stronghold in the segment. However, Williamson emphasized the core focus on mass-market South African consumers, leveraging the 3.1 million customers served by its Mass and Foundation cluster, which caters to low-income and lower-middle-income individuals.

With a customer-centric approach and an eye on the competitive banking sector, Old Mutual aims to position itself as a key player in South Africa’s financial services ecosystem, offering a comprehensive range of solutions to meet the diverse needs of its clientele.