Old Mutual has made significant strides in the launch of OM Bank, its new digital-first retail banking venture in South Africa.

The company anticipates an initial loss run rate of R1.1 billion to R1.3 billion, with losses expected to decrease as revenue grows, ultimately reaching break-even by 2028.

Key milestones have been achieved, including meeting the remaining Section 17 conditions and securing regulatory approval for the appointment of Clarence Nethengwe as CEO of OM Bank.

The bank’s board of directors has also been established, with Nomkhita Nqweni serving as the inaugural chairperson. These leaders will oversee a gradual, risk-based customer acquisition strategy, culminating in a full national rollout by the fourth quarter of 2025.

In March 2025, Old Mutual received Prudential Authority approval for its banking license, marking a critical step in its strategic ambition to build an integrated financial services business. Since 2021, the company has invested a cumulative R2.8 billion to develop OM Bank and secure a deposit-taking retail banking license.

OM Bank is designed to deliver tangible value to customers while positioning Old Mutual for long-term competitive advantage in a highly competitive market. By leveraging its trusted brand, extensive distribution network, and existing customer base, Old Mutual aims to scale a digital-first banking platform that offers seamless, cost-effective financial solutions.

The cloud-based platform will provide a single facility account with debit, credit, overdraft, and savings features, empowering customers with greater financial control. Old Mutual also plans to integrate its Rewards Programme into OM Bank, enhancing customer engagement and value.

Old Mutual expects OM Bank to achieve break-even with a customer base of between 2 million and 2.5 million.

The launch of OM Bank is a key component of Old Mutual’s broader strategy to optimize its balance sheet, reduce complexity, and enhance returns.

Since its managed separation in 2018, the company has returned R61.6 billion to shareholders, including a special dividend of R4.9 billion, the Nedbank unbundling of R49.5 billion, and cumulative share buybacks of R7.2 billion. Additionally, Old Mutual has distributed ordinary dividends totaling R27.4 billion since 2018.

Despite these significant returns, Old Mutual has continued to invest in future capabilities, with OM Bank receiving the largest capital allocation in 2024. CEO Iain Williamson emphasized the company’s commitment to balancing shareholder returns with strategic investments, ensuring long-term growth and competitiveness.

The launch of OM Bank represents a pivotal moment in Old Mutual’s strategic journey, combining innovation with its established market presence to create a scalable, customer-centric banking solution.

Old Mutual. Picture: Supplied

After more than a year, I reconnected with an interesting colleague, Lufhuno, aka Lloyd, whom I last met on March 5 2020, when the first Covid-19 case was reported in SA.

We met at the weekend and had a lot to talk about — from the reeling English Premier League leaders Arsenal to the pandemic and, of course, the topic of money — especially digital banking.

We left the West Rand, where Lloyd lives, to visit another colleague, Dunga, who resides in Featherbrooke Estate in Krugersdorp, right next to the magnificent Walter Sisulu National Botanical Gardens.

When we arrived at Dunga’s posh home, all indications were that this was the ideal place to talk about money.

Dunga, a private equity specialist, offered us Kilchoman Cask Strength 2014. I was introduced to this particular whisky by Cuen and Uncle Frank, back in the days when the drink you had accurately described your income.

With whisky glass in hand, it seemed appropriate to talk about money, banking and everything to do with wealth.

I ventured: “Are you aware that Old Mutual plans to launch a digital bank in 2024 to enter a contested terrain dominated by Capitec Bank, Discovery Bank, Tymebank and the newly formed Bank Zero, plus Shoprite?”

Lloyd replied, “What’s new? The boundaries between insurers, investment groups, retail and banks are blurred.