Discovery yesterday unveiled what it describes as the "world's first behavioural bank", a fully digital bank that can be joined from March 2019 by anyone with a smartphone.
In 2015, reports surfaced that Discovery was looking to introduce banking services to the South African public, and in 2016 the health insurer confirmed it had applied for a bank licence.
"Discovery Bank presents the latest manifestation of our core purpose of making people healthier and enhancing and protecting their lives," says Discovery Group chief executive Adrian Gore.
"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
"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."
Gore explains 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.
"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 CEO, states: "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."
"Our ambition is to create a new category of banking - behavioural banking - through which we dramatically impact the landscape of financial health and resilience in the country," Gore concludes.