From life office to bank app, here’s why insurers want your main account

When Old Mutual Bank CEO Clarence Nethengwe explains why Old Mutual wanted its own bank, he does not begin with slick app screens or cross-selling promises. He starts with plumbing.

“Banking … it’s all about maturity transformation,” he said, arguing that a banking licence gives Old Mutual access to customer deposits, especially cheaper transactional balances, instead of relying on more expensive wholesale funding.

Just as importantly, he said, “banking also gives us something which an insurer can never give us, which is access to data.” That mix of funding, data and daily relevance helps explain why South Africa’s insurers are edging out of the life office and into the competitive transactional banking space.

The timing is not accidental. South Africa’s economy looked materially friendlier in 2025 than it had for several years. GDP grew for a fifth consecutive quarter, inflation averaged roughly 3.2%, interest rates fell, and household credit demand began to stir.

At the same time, the six big banks showed there is still plenty of money in the game. PwC’s Major Banks Analysis, which combined local currency results of Absa, Capitec, FirstRand, Investec, Nedbank and Standard Bank, shows that their combined headline earnings rose to R152.5-billion in 2025. So, while the market is crowded, it is also highly profitable, which makes banking look like a very large, very sticky earnings pool — and it suddenly all makes much more sense.

From funeral policies to debit cards

For Old Mutual, this is not a side hustle. The group had already created Old Mutual Banking as a separate operating segment in its 2025 financial statements, underscoring how central the strategy has become. Nethengwe says the bank solves a structural problem in the group’s long-running lending business by giving it access to deposits and allowing it to do what banks do best: gather short-term money cheaply and lend it more profitably over time.

He also argues that South Africa’s banking profit pools remain both “huge” and highly concentrated among the established giants, leaving room for a trusted brand with seven million customers to prise open the vault door.

The vault door is ajar

Jurie Strydom, Old Mutual’s CEO, framed the push as part defence and part expansion. “There’s a convergence both ways,” he said.

Banks have moved more aggressively into insurance by leveraging their customer relationships; insurers, in turn, are looking at banking because they want “a complete, multipronged relationship” with the customer.

Strydom added that new entrants now see an opportunity to “leapfrog legacy technology with new technology which can lower cost to serve to customers and improve the customer experience compared to traditional banks”.

Discovery Bank is the clearest proof that the model is not just a theory. CEO Hylton Kallner says about 70% of Discovery Bank’s new joiners are completely new to the group, showing that a bank can be more than a retention tool for an insurer. But the more telling number may be what happens after people sign up.

He said Discovery had seen a 40% to 50% increase in banking activity over 24 months, while “around about 40%” of clients were already highly engaged or primary bankers. He also said Discovery’s deposit base was the fastest-growing in the market over multiple time periods.

In banking, deposits are the oxygen tank. Fast deposit growth suggests Discovery is not just attracting curiosity seekers but building real balance-sheet heft.

Welcome to the ‘super app’ arms race

Kallner’s description of Discovery’s “super app” also helps explain why insurers now see banking as such a powerful front door. He describes the ambition as bringing “your whole financial services universe and your whole financial world” into a single integrated app.

That is not just about convenience. It is about collapsing the distance between payments, savings, insurance, rewards and borrowing. The more often you open the “super app”, the more often the group can serve, price, nudge, cross-sell and retain. Banking, in that model, becomes the heartbeat of the broader financial-services relationship.

Nethengwe makes the same point from Old Mutual’s side, only more bluntly. Insurance may build rich balance sheets, but it does not always create frequent interaction. “With banking, interaction is on a daily basis,” he said.

That means the group can see how a customer’s life is changing and tailor solutions accordingly, whether that is savings, protection or advice.

He also argues that banking helps solve another problem insurers have long had: winning younger customers over at an earlier life stage. “Banks are able to do that easily,” he said, whereas life insurers often arrive later, after the relationship has already been captured elsewhere.

A third financial services giant is also entering the banking arena — Sanlam is partnering with GoTyme (formerly TymeBank) to establish a retail credit joint venture and launch a co-branded “super app” in South Africa. (Seems like “super app” is the new term in banking.) With a combined customer base of more than 17 million users, the Sanlam GoTyme partnership appears poised to win the “super app” game.

Suddenly, everyone wants your swipe

None of this means the incumbents are asleep at the wheel. South Africa’s major banks remain well capitalised, technologically aggressive and increasingly ecosystem-driven. PwC’s Major Banks Analysis says the big banks’ balance sheets remain underpinned by strong capital, liquidity and risk management positions. In FY25, these balance sheets continued to grow, with combined deposits now reaching R8.3-trillion (up 8.4% against FY24), and gross loans and advances of R6.8-trillion growing 5.8% against FY24.

The big banks are investing in cloud, AI, fraud detection and customer experience while defending enormous balance sheets. Discovery, for its part, is already using AI to build behavioural fingerprints for clients and automate payments and fraud checks in real time. The challenge for Old Mutual and any insurer-turned-bank is therefore not simply to launch an app and buy advertising. It is to build trust, daily utility, deposits and primary-account status quickly enough to matter.

Old Mutual still has to prove it can do that at scale. Nethengwe says customer acquisition has moderated from the early “euphoria” of about 5,000 sign-ups a day to roughly 3,000 a day, where management expected it to settle. He believes growth will pick up again once the group’s mass marketing campaign goes fully public (watch out for Old Mutual Bank ads in a few weeks).

Nethengwe and Strydom both pointed investors to financial year 2028 as the break-even horizon, with customer growth and the share of active customers the key milestones to watch. That is a reminder that this is still an expensive build.

But it also clarifies the prize. If insurers can turn policyholders into primary bankers, and primary bankers into broader financial-services customers, the payoff is ownership of the relationship itself — and that’s the pot at the end of this financial rainbow. DM