Clarence Nethengwe’s appointment as CEO of Old Mutual’s new bank, OM Bank, has been approved by the Reserve Bank’s Prudential Authority.

Nethengwe’s appointment as the country’s newest bank’s CEO is effective immediately, Old Mutual announced on Thursday, 30 January.

The bank, set to launch in 2025, will start with 200 selected customers in the first quarter, expanding to 8,000 by mid-year. OM Bank, a “digital-first” entity with no more than 600 staff, will initially offer transactional accounts, unsecured loans, and insurance, with value-added services like bill payments to follow.

Old Mutual has invested around R3.2 billion to establish the bank, leveraging a ready-made core banking system from 10x Banking. The concept of OM Bank traces back to 2007 when Old Mutual Finance was founded, and its evolution into a bank follows Nethengwe’s vision of providing integrated financial services.

The bank will target lower- to middle-income earners, focusing on the mass market where growth is most prominent.

While OM Bank won’t initially offer business banking or home loans, these are plans for the future.

Nethengwe told Fin24 that the bulk of OM Bank’s customers will likely earn between R10 000 and R80 000 per month, with about 85% earning between R10 000 and R40 000 per month.

“When you look at Old Mutual customer base in South Africa, almost, we were about 6 million customers in our insurance businesses, more than 60% of what we call the mass market customer,” he said.

“These are people who earn between R8 000 and R30 000 per month. We believe that will ultimately be replicated across OM Bank.”

Although OM Bank won’t offer business banking at launch, Nethengwe has confirmed that it’s a potential area for future expansion. Home loans will also be introduced eventually, though Old Mutual already provides mortgage services through a partnership with SA Home Loans, which handles the back-end administration while funding comes from the insurance group’s balance sheet.

“Our focus now is to build a very strong retail franchise first,” he says. “The business case is to offer home loans later, but there is a gap in the market for people who don’t earn enough for a home loan but earn too much to get an RDP house.”

Despite strong competition from established players like Capitec, Nethengwe is confident that OM Bank’s solid foundation, built on Old Mutual Finance’s R16 billion lending book, will drive its success. While OM Bank aims to break even by 2028, experts believe a more realistic target would be 2030.

OM Bank’s digital-first approach aims to make banking more accessible, particularly for underserved populations.