The South African Reserve Bank’s (SARB’s) Prudential Authority has gazetted the official notice of registration for a new mutual bank in the country – one of four new banks launching over the next few years.

The PA gave notice that YWBN Mutual Bank has now been registered as a mutual bank in the country, with effect from 22 January 2024.

This marks the final step in the official registration process for the bank, following the announcement from the Young Women in Business Network (YWBN) that it received its mutual banking licence at the start of the year.

The bank said the banking licence will allow it to push forward to a full launch for the group, likely in 2025 or beyond.

Mutual banks are banks that are ultimately owned by their depositors, who in turn become shareholders in the bank and can have a say in their operations (through general meetings). These banks tend to be more conservative in their investing and lending operations, usually more focused on saving.

They are also restricted, by law, in their investment and lending operations.

According to the SARB, there are only handful of mutual banks in the country – these include Bank Zero Mutual Bank, Finbond Mutual Bank and GBS Mutual Bank. VBS Mutual Bank was also a prominent player in the sector before being liquidated.

First announced back in 2018, YWBN, operating as a cooperative financial institution (CFI) at the time, said it would start the process of becoming the first women-owned bank in South Africa by converting its operations from a CFI – which can only offer services to its members – to a fully-fledged mutual bank.

The group received the necessary approvals to start building a mutual bank, but hit regulatory hurdles in 2021 after its ‘Own the bank’ share scheme failed to comply with regulations, and it was forced to pay back the money it had raised.

According to YWBN managing director, Nthabeleng Likotsi, the bank has a number of firsts to its name: the first women-owned bank, the first black women-owned bank, and the first Cooperative Financial Institution (CFI) to successfully apply for and receive a mutual banking licence.

Likotsi said that the mutual banking licence will allow the group to move forward to a full launch, where it will be able to offer small businesses savings and loan products for cash loan purposes. The group has a particular focus on the unbanked and underserved population.

The MD said that it will look to entrepreneurs and SMEs, particularly in townships for its services – but will also place strong emphasis on saving.

Likotsi said the bank’s focus will now shift to building the bank: raising capital, setting up its network and laying the foundations to better serve the marginal communities it is targetting. This will be followed by the commercial launch of the bank – but she stressed that there is no official date set.

Four new banks

YWBN is just one of four new banks entering the South African market.

Financial group Old Mutual is in the process of launching its own full-service bank, which will compete with the established retail banks in the country. At last reporting, it is expected to launch some time in 2024.

Postbank recently cleared several hurdles on its path to becoming a fully-fledged banking operation, splitting from the South African Post Office and forging its own path forward.

Finally, the Department of Women, Youth and Persons with Disabilities (DWYPD) recently told parliament that it is making progress on its plan to create a new cooperative bank in South Africa.

Like YWBN before it got its mutual banking licence, the government bank, which has the proposed name of the SA Innovative Financial Services Cooperative (SAIFSC), will be more akin to a formalised stokvel than a mutual or commercialised bank.

Cooperative banks are more conservative in nature and invest the members’ money into secure funding and government bonds instead of riskier stock exchanges.

They also differ from mutual banks as they operate under a common bond, either as a group of people that work together or belong to a particular association or a specific geographical area.