With the approval of the Prudential Authority (PA) secured, Old Mutual’s plan to launch its new bank by the end of the year is coming together.
On 19 April, South Africa’s second-largest insurer announced that, following a stringent regulatory review of its application in terms of section 16 of the Banks Act, the PA had granted the group approval to establish a bank “subject to certain licence conditions”.
Iain Williamson, the group’s chief executive, said the approval to establish a bank is a material catalyst “in its strategic delivery journey”.
“It accelerates the fulfilment of our strategic choice to build an integrated financial services business and further strengthens our victory condition to be our customers’ first choice to sustain, grow, and protect their prosperity,” said Williamson.
Old Mutual partnered with London-based 10x Banking, founded by ex-Barclays chief executive Antony Jenkins, in 2016 to establish the operational framework for its new bank.
In 2022, the group applied for a banking licence. When presenting its 2023 results last month, Old Mutual stated that it completed building the bank’s core functions by the end of last year, on time and staying within budget, with a cost of R1.75 billion.
The group shared that Old Mutual’s board had approved an additional R800 million in funding for the team to continue work on testing and developing marketing materials.
Read: Old Mutual prepares to shake up banking sector with new bank
Per regulation, Old Mutual must integrate its new bank with the payment clearing houses.
Last week, the group stated it was shifting from “bank-build mode” to an industry testing phase with select banking partners. Once testing is error-free, the new OM Bank will fully integrate with the National Payments System.
A small group of customers will then test the system using cards, point-of-sale machines, and ATMs. If successful, a public launch is expected before the end of the year.
Once operational, the bank will primarily target lower-affluent consumers and the upper-mass-market. The group told Business Tech Africa that it hoped to leverage the brand loyalty of its 3.1 million customers in its Mass and Foundation business division.
Quoting from Old Mutual’s annual report, BusinessLive reported that the group’s core banking platform was being built using the latest, cloud-native technology provided by 10x Banking.
The group’s chairman, Trevor Manuel, said artificial intelligence will play an important role in Old Mutual’s banking unit, particularly to drive down bank charges.
