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Momentum sets sights on transactional banking

Insurer eyes savings-led transactional banking capabilities integrated into rewards programme.

Momentum is the latest insurance group to set its sights on transactional banking.

The insurer is in the process of evaluating banks with which it can partner to gain access to a banking licence as it seeks to enhance its Multiply wellness and rewards offering.

Zureida Ebrahim, CEO of Momentum Client Engagement Solutions, tells Moneyweb it will decide on a partner “very soon”, after which it may take around a year to complete the compliance work necessary for it to make use of the licence.

“In terms of capability, we have actually already built a significant portion. We have just launched our initial offering, which doesn’t a require a banking licence at this stage.

“But we are so ready for it,” she adds.

Access to a banking licence will allow Momentum to position its newly launched Multiply Money benefit as a fully digital savings and transactional offering.

In its current form, Multiply Money comprises a savings wallet and payments wallet, both of which can be managed via a mobile app.

Qualifying Multiply members earn cashback rewards of up to 12% when shopping at the insurer’s retail partners, Pick n Pay and Dis-Chem, and up to 60% via the Multiply online shop.

The cashback rewards are automatically transferred to the savings wallet, where interest of 5.25% can be earned from the very first cent. “Because this is a breadcrumbs savings vehicle – it is not a long-term savings vehicle – we looked at the interest rates on savings vehicles with a savings amount of less than R20 000 and said that we want to have a leading [rate] in the market,” Ebrahim explains.

Members can spend cashbacks by transferring them from the savings wallet to the non-interest bearing payments wallet, which Momentum says promotes conscious spending in that members will have to weigh up earning interest versus spending. Cashbacks can be spent via the Multiply Visa card, mobile app and online store.  

Once it gains access to a banking licence, members will be able to deposit money into the savings and payments wallets, withdraw their money in cash or make payments to third-party account holders, she says.  

Momentum’s transactional banking ambitions set it on course to compete more strongly against insurance rivals Old Mutual and Discovery. The former already boasts a transactional account, which it is currently ramping up, while the latter is expected to launch a full-service retail bank by year-end.

Read: Old Mutual ramps up transactional banking

Discovery to pay FirstRand R1.8bn to exit credit card JV

Multiply Money and cashbacks are the latest enhancements to the Multiply offering, launched 12 years ago, and come at a time when the insurers’ competitors are beefing up their respective rewards offerings.

According to Ebrahim one way in which Momentum Multiply is distinct is that it is the only integrated lifestyle management platform in the country, in that it brings health and fitness, safety and finances into one platform that offers rewards at partners and on Momentum products.

Read: MMI hits reset

Momentum forms part of the strained MMI Holdings group, which is undergoing significant change as new management seeks to improve its financial performance.  

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Everyone wants to open a bank or issue a reward card. How big do they think the South African market is. Someone is going to get hurt and it won’t just be VBS.

So true.

With a dying South Africa, at best some lifting of market share. Maybe if they do not do something to stay competitive though, they lose what they already have.

When one lives in a country governed by the usual suspects, growth is highly unlikely especially when their focus is on stealing someone else’s property.

I’m a Momentum Multiply member and I received a call from African Bank (in their role as a Multiply partner) offering me a personal loan or a consolidation loan. Does this mean Momentum doesn’t consider African Bank’s licence good enough?

I still wonder why Firstrand unbundled Momentum a few years back. Susequently Firstrand has developed Ashburton as an asset manager – Momentum used to have an asset management business and it also added som insurance products.

Now Momentum is trying to become a bank as well.

Really would have hoped that directors could come up with a bit more craetive way to grow revenue

Banking and insurance — both licenses to print money!

Not really. Insurance companies with exposure to SA only has struggled immensely and its profitability barely exceeds its cost of capital.

Generating returns of 15% and lower the banking industry is far from printing money. If you consider the immense leverage and other risks that banks take this is a paltry return. That is the reason why banking shares are trading a vast discount to the rest of the market./

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