Banking bonanza lures insurer
Old Mutual, SA’s oldest insurance company, has not written off the possibility of acquiring a banking licence as the insurer looks at how to scale up its existing money-lending activities.
“We are comfortable with what we have at the moment, but from time to time we do think where we should take the full banking capabilities,” CEO Peter Moyo said in an interview on Friday at Old Mutual’s first results since returning from London.
Despite not ruling out a future play for full banking capability, Moyo said banks made money from lending, and “…taking deposits is a cost”.
The insurer owns the secondlargest bank in Zimbabwe, and already has a large lending business in the low-income and corporate sectors.
SA’s banking landscape is dominated by the big four, Standard Bank, Absa, FirstRand and Nedbank. Over the past decade Capitec has emerged as a strong competitor which has eaten into their respective market shares but as yet does not offer mortgages or vehicle finance. The emergence of digital banks that are forecast to inundate the market in years to come, such as TymeDigital and Bank Zero, is expected to further increase competition in the sector.
The Adrian Gore-led Discovery is poised to launch its own bank before the end of the year, posing another threat.
The ANC wants to create a state-owned bank to help boost lending to the country’s previously disadvantaged, while a state-owned utility, the SA Post Office, is aiming to use its outlets to move into banking.
Moyo said there was space to compete in that transactional banking market.
“When you decide you are actually going to go into a space you actually have to have a form of competitive advantage why customers will be drawn to you more than anybody,” he said.
Two years ago, Old Mutual entered into a transactional banking agreement with Bidvest. Its banking unit has since managed to grow to 400,000 transactional accounts, with 45% of them being used as primary accounts.
While Bidvest provided a platform for some of the group’s banking services, Moyo said there was nothing to prevent the insurer from adding other partners.
“Our strategy is not dependent on Bidvest, our strategy is based on the capabilities to the clients and our funding model.”
The insurer is opening as many as 40,000 new bank accounts a month through the partnership, said Clarence Nethengwe, MD of the insurer’s mass and foundation cluster.