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Discovery's digital bank waiting for licence

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 22 Sept 2016
Discovery plans to invest R800 million to R1 billion for infrastructure, staff costs, licence costs and initial capital.
Discovery plans to invest R800 million to R1 billion for infrastructure, staff costs, licence costs and initial capital.

It will take at least two years before health insurer Discovery gets a bank licence and introduce banking services to the South African public.

Last year, it was reported that Discovery was looking to disrupt SA's banking industry by launching its own retail bank and compete in a highly competitive market with the "big four" banks - Standard Bank, Absa, First National Bank and Nedbank.

Discovery CEO Adrian Gore said its bank will differ from the competition and what is available in the market, as it will be built from a technology perspective, according to reports.

In April, Discovery went ahead with its plans to set up its own banking unit and applied for a licence.

However, the company expects it will still be a while off before the bank is fully operational.

Discovery CFO Richard Farber says: "We are currently working with regulators to apply for the authorisation and the licence, both of which are still pending."

Game-changers

Over the past few years, Discovery has been committed to diversifying its revenue streams and offering innovative solutions, such as its loyalty programmes, to customers.

In 2012, Discovery rolled out HealthID, SA's first electronic health record application. The health insurer introduced the app to put patients' health records in their doctors' hands.

As a result of the growing interest in collecting information about clients and incentivising healthier behaviour, Discovery introduced an active rewards service for Vitality members last December.

The active rewards service requires users to have an Apple Watch or fitness band that tracks their movements and rewards them accordingly.

According to Gore, the group's Vitality rewards programme has given Discovery insight into behavioural economics, and it could translate well into banking.

Farber explains: "We are looking to enter banking as we feel we can take our unique approach to product innovation, our brand and our infrastructure to bring value to our clients in a retail banking proposition."

Meanwhile, a Sunday Times report recently revealed Discovery has set aside R1 billion to build the digital infrastructure for its new bank.

Farber confirms Discovery estimates it will cost between R800 million and R1 billion to build the bank, including the infrastructure, staff costs, licence costs and initial capital.

"Full details on how we differentiate our products and approach will be available once we launch in a few years' time."

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