Discovery introduces the world’s first behavioural bank

By Janice Roberts

Adrian Gore

Financial services company, Discovery, today announced details of its new banking offering. Described as the world’s first behavioural bank, the fully digital bank leverages Discovery’s Shared-Value model, and can be joined from March 2019 by anyone with a smart phone.

“Discovery Bank presents the latest manifestation of our core purpose of making people healthier and enhancing and protecting their lives. 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,” said Discovery Group Chief Executive, Adrian Gore.

“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 launch of Discovery Bank comes at a critical time in South Africa and is highly relevant in the context of our current technical recession. More South Africans are today credit active than are employed; 40% struggle to make debt repayments; the country has one of the lowest savings rates in the world; and less than 4% of South African citizens are adequately prepared for retirement.

Gore explained; “Given our current poor savings culture, and the need for personalised banking that is transparent, equitable, efficient and controllable, the case for disruption is clear. We aim to address this need by leveraging our Shared-Value model to build the world’s first behavioural bank.”

Gore further explained that the Group’s expertise in behavioural science and incentive design together present the core mechanism underpinning the Bank’s behavioural differentiation. The product design addresses financial risk by collating and characterising financial behaviour according to the 5-3-80 model of financial health.

Five controllable behaviours of spending less than we earn, saving regularly, having insurance in place for serious events, paying off property and investing for the long term; can alleviate three key risks of unaffordable debt, exposure to unexpected expenses, and insufficient income in retirement. These risks result in 80% of events where individuals are not able to meet their financial obligations.

The Bank’s behaviour-change programme, Vitality Money, will guide and incentivise consumers to achieve better financial health and resilience. A key feature of the Bank is dynamic interest rates, an industry first. This innovative benefit 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.

The Bank further leverages the Vitality partner chassis to create an attractive ecosystem of rewards for clients in the form of dynamic discounts that deepen Vitality’s incentives. This unique rewards structure is paired with the latest in banking technology; offering smart banking products with both transactional and credit card capabilities, a single credit facility, multiple ways to pay instantly, banking options for families and multiple savings options with dynamic interest rates – all accessible in real time on the Discovery Bank app.

Commenting on the Bank’s operational strategy, Barry Hore, Discovery Bank Chief Executive Officer, said; “Discovery Bank is building a banking system from the ground up; incorporating the latest in banking technology to create a mobile-first bank, to meet the sophisticated, personalised banking needs of individuals through a branchless structure, supported by an omni-channel service capability.” Gore concluded with setting out the Bank’s vision; “Our ambition is to create a new category of banking – behavioral banking – through which we dramatically impact the landscape of financial health and resilience in the country.”

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