Of cupcakes and sharks

Discovery Bank’s business model is all about using incentives to get people to make better financial decisions. Head of client insights, Akash Dowra, tells us more.
Read time 4min 20sec
Akash Dowra
Akash Dowra

If I were to ask you what you’re more afraid of, a cupcake or a shark, I’m pretty certain your vote would be for the latter. But if Akash Dowra, head of client insights at Discovery Bank, is to be believed, the idea that sharks are more dangerous than cupcakes may be a bit off the mark. There are way more people who die due to bad lifestyle decisions than there are people who die from shark attacks, yet sharks frighten us, and cupcakes entice us.

Ice-cream Sundays

Discovery Bank recently launched its Spend Trend report, which unpacks economic trends and provides a breakdown of spending habits among the bank’s client base over the last year. As part of the report, the bank showcased how spending trends vary based on the day of the week. Findings include:

  • On Mondays, Discovery Bank clients are most likely to buy data, pay their utility bills and do online shopping.
  • They tend to fill up their tanks and book flights on a Tuesday.
  • Wednesday is the day clients log in to their banking app and buy event tickets.
  • Thursday is earmarked for buying alcohol.
  • Friday is the day most clients stock up on their health products and order takeout.
  • Discovery Bank clients shop for groceries and clothing, and stock up on DIY supplies on Saturdays.
  • And, finally, Sundays are popular days for making religious donations and buying ice-cream.

Dowra’s point is that people tend to have different biases that cause us to downplay the ramifications of our behaviour when we only see the results of these actions at a later stage. So, we’ll eat the cupcakes without thinking about how they could affect our health down the line. “These biases are the same in finance as they are in health. In the moment, it’s so easy to think that you can always save tomorrow or go for a run tomorrow because we aren’t thinking about how our current actions contribute to future financial and physical gains.”

Understanding this tendency, Discovery Bank’s business model aims to give people small rewards to encourage them to make better financial decisions today, with the goal being to help clients have more financial security in the future. “We use advanced analytics to understand our clients better and then we provide very tangible rewards to encourage them to change their behaviour.”

Some of the good financial decisions he is referring to include spending less than you earn, saving regularly, securing insurance to safeguard yourself against adverse events, paying off property and making long-term investments.

Dowra says the aim is also to use technology to help clients understand the numbers better. Most people don’t know how much they’re worth or how much they spend each month. Discovery Bank tracks, analyses, and simplifies these numbers so that clients have a clearer picture of where their money is going without having to read a complicated balance sheet.

Changing behaviour

Discovery first dipped its toe into the banking space when it launched its DiscoveryCard through FNB several years ago, but soon realised that it could offer clients move value by starting its own venture, says Dowra.

“DiscoveryCard taught us a great deal about the banking space and gave us some key insights about what clients want and provided direction around the type of banking platform we wanted to create.”

We integrate with third parties to get most of the supporting documents we need to verify personal information without having to ask clients to provide anything.

Leveraging the insights Discovery has gained via its health business over the last two decades, it was able to come up with a shared value banking model. “Many of the different elements of Discovery’s health insurance business translate directly into the work being done by the bank,” he says. That said, Discovery Bank’s behavioural banking is the product of extensive research and testing to understand what makes people change their financial behaviour, says Dowra.

Enabling this new approach to banking required a lot of advanced technology.

“We had the good fortune of coming into banking at a time when we could build everything from scratch and make sure that it was completely scalable.” The bank developed state-of-the-art banking infrastructure that shortens product development cycles and allows them to integrate different components without having to worry about these components not being able to talk to each other, he adds. This infrastructure layer is key to the kind of products and service Discovery Bank wants to offer customers.

Say hello to multi-banking
Today, it’s not uncommon for people to have more than one bank account and to have accounts with different financial institutions. This is an encouraging trend for newcomers like Discovery Bank because it means that people are more willing to try out new players. But how do they keep track of all these accounts without having to log onto several different banking platforms? Multi-banking, one of the first use cases for open banking, lets people see all their different financial accounts – often from multiple banks – in a single place. This gives customers a complete overview of their financial situation and empowers them to make financial decisions based on a more accurate picture of their financial situation.

Where many competitors have opted to give customer ‘bare bones’ banking functionality at a very low cost, says Dowra, Discovery Bank wants to provide a more premium service, akin to having a private banker, including all the features and functionality customers have come to expect.

In line with this, one of the goals when setting up the bank was to remove the friction and admin that goes hand in hand with dealing with a financial service provider. According to Dowra, Discovery spent a lot of time trying to make sure that the process of joining the bank is as quick, intuitive, and easy as possible. “We integrate with third parties to get most of the supporting documents we need to verify personal information without having to ask clients to provide anything.”

Discovery has taken this so seriously, he says, that its currently benchmarked third in the world for the least number of clicks to join a bank. “And we’re working towards becoming number one because, in our minds, nothing should hinder potential customers from completing the process of joining the bank.”

* This feature was first published in the May edition of ITWeb's Brainstorm magazine.

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