Insurer launches new-style bank

Financial services company Discovery is to launch what it calls 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 smartphone. Discovery group chief executive, Adrian Gore, explained: “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 inbetween 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.” He added: “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.” Mr 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.” The group’s expertise in behavioural science and incentive design together present the core mechanism underpinning the bank’s behavioural differentiation, he said. The product design addresses financial risk by collating and characterising financial behaviour according to the 5-3-80 model of financial health: There are five controllable behaviours: spending less than we earn, saving regularly, having insurance in place for serious events, paying off property and investing for the long term These can alleviate three key risks: 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. Based on the above model, 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 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. 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.”

Insurer launches new-style bank

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