Old Mutual Launches Bank With Plans to Break Even in Three Years
TLDR
- OM Bank, the latest entrant in South Africa’s competitive banking sector, has received its banking license from the South African Reserve Bank
- Set up by Old Mutual, the new bank plans to be fully operational by the fourth quarter of 2025
- The bank is expected to face initial losses of up to R1.3 billion ($72 million) before reaching break-even, which is targeted for 2028
OM Bank, the latest entrant in South Africa’s competitive banking sector, has received its banking license from the South African Reserve Bank. Set up by Old Mutual, the new bank plans to be fully operational by the fourth quarter of 2025. CEO Iain Williamson confirmed the news in an interview on Tuesday.
The bank is expected to face initial losses of up to R1.3 billion ($72 million) before reaching break-even, which is targeted for 2028. South Africa already has six established banks, and OM Bank will also compete with new entrants, including one backed by billionaire Patrice Motsepe, and fintech firms.
Old Mutual has invested R2.8 billion to build the bank and secure its deposit-taking license. The lender, which currently has 10 employees, will first target Old Mutual’s money account cardholders before expanding to the broader public in early quarter four of 2024.
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Key Takeaways
OM Bank's launch marks a significant entry into South Africa’s already crowded banking market. Despite initial losses, Old Mutual’s investment reflects a long-term strategy to gain a foothold in the retail banking sector. The bank's focus on leveraging Old Mutual’s existing customer base could provide an early competitive advantage, but it will face strong competition from established banks and new fintech challengers. The financial backing and strategic timeline for break-even in 2028 underscore Old Mutual’s commitment to expanding its services, despite the challenges ahead.
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