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The Prudential Authority (PA), the financial regulator that falls under the auspices of the SA Reserve Bank (SARB), has granted Old Mutual initial approval to launch a bank.
The banking regulator approved Old Mutual’s section 16 application for a licence to establish a bank, subject to certain conditions. Old Mutual plans to call its new lender OM Bank, which completed its infrastructure and digital platform build at the end of last year.
"We are extremely pleased to have received the regulator's go-ahead and look forward to shaking up the financial services space with new innovations and solutions. We can confirm that the launch is on track," Old Mutual CEO, Iain Williamson, said in a statement on Friday.
The next steps in the evolution of OM Bank will include integration testing and connecting to South Africa’s national payments system. The integration of OM Bank into payment clearing houses will follow a regulated process according to prevailing industry standards.
Williamson told News24 in March that Old Mutual had already spent R1.75 billion to build its core banking system and has committed another R800 million to continue building out OM Bank ahead of a planned public launch before the end of 2024.
OM Bank will be targeted at South Africa's mass retail banking market, which is dominated by Capitec with its more than 21 million customers.
Williamson’s comments to News24 in March indicated that Old Mutual plans to initially lure banking clients from the 3.1 million customers served through its Mass and Foundation business cluster. Old Mutual’s Mass and Foundation business cluster serves low-income and lower-middle-income individuals, who typically earn between R1 000 and R30 000 per month.
These customers, which include salaried workers such as police officers, teachers and nurses, are served via a range of offerings ranging from life and funeral insurance as well as savings and lending products. Williamson described such customers as its targeted "centre of gravity."
"The approval to launch a bank, affirms our progress in building the integrated financial services business of the future," said Williamson.
