Discovery debuts digital bank
South African financial services company Discovery is exploring new realms with the unveiling of its digital banking offering.
It calls it the “world’s first behavioural bank” and the digital entity will be available from March 2019 for smartphone users. It is based on the “behavioural” model Discovery uses to reward its life and health insurance customers for their lifestyle choices.
As reported in ye olde October 2016, Discovery received the green light from the regulators to set up a bank – the anticipation was that a banking licence would be granted within a year (yeah, most things are late in life). It allocated ZAR 2.1 billion ($153 million) to the project, FinTech Futures understood at the time.
As part of that ambition, it acquired the majority stake in its credit card unit – Discovery Card – from FirstRand Bank. Discovery Card has 250,000+ customers.
In the latest development, Discovery’s chief executive Adrian Gore says: “The banking system in South Africa is world class and our competitors are brilliant. We did, however, see a gap in-between the traditional offerings and fintech offerings – a third entry point that is essentially a new category of banking and a first of its kind globally: a behavioural bank.”
If you’ve recovered from the shock of someone praising their rivals, Gore adds: “In the same way that we aimed to address the negative impact of human behaviour on health risk and the sub-optimal design of insurance systems through our shared-value insurance model; Discovery Bank aims to do the same in the context of financial risk and banking systems.”
The bank will offer a “behaviour-change programme”, Vitality Money, which will guide and incentivise consumers to achieve better financial health and resilience.
Another “key feature” is dynamic interest rates, “an industry first”. This design links interest rates directly to clients’ financial behaviour; enabling them to earn more interest on savings and to pay less interest on credit as they improve their financial behaviour with Vitality Money.
Back in 2016, Discovery went to market for its new bank’s technology, as reported exclusively by FinTech Futures. It was understood that SAP, Infosys and Oracle FSS bid for the project. The selection results are yet to be unveiled. We have contacted the bank for details.
In terms of competitors, last month, Bank Zero, a new challenger mutual bank in South Africa, launched its first trial runs.
The bank had been registered as a mutual bank effective 17 August 2018. It received a provisional licence back in January of this year by the South African Reserve Bank (SARB).