Old Mutual plans to open a bank in 2024. It also plans to reassess its relationship with its customers and third-party partners.
The group plans to go big on technology when the bank launches in the second half of next year.
“We are building this transactional capability using the latest technology that will allow enhanced servicing and personalisation. This, together with a cloud-based technology stack, will enable us to deliver cost-effective, flexible, and scalable solutions to our customers,” said the group in its voluntary trading update on Tuesday.
Old Mutual says it received Section 13 approval from the Prudential Authority from the SA Reserve Bank to apply for a banking license in South Africa.
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Though it already has transactional and lending products, the lack of a banking license has meant that it has to rely on its commercial relationship with Bidvest, a third party, to keep these going. So far, its Money Account has been in association with Bidvest Bank.
“While this commercial arrangement has allowed us to gain experience in transactional banking services, a divergence of aspiration requires us to reassess our future arrangement to deliver on our customer needs,” notes Old Mutual.
It adds that the establishment of a bank will allow it to ‘hold the primary relationship’ with its customers.
This will also enable it to accept retail deposits which it says will provide a cheaper source of funding.
The company plans to spend R1.75 billion on its transactional capacity for the bank. The project is set to launch in the second half of 2024.
Source: Old Mutual, My Broadband