Discovery Bank’s shared-value approach is transforming banking
Discovery Bank draws on behavioural economics to support, guide and incentivise people to manage their money well
Rooting every decision in a noble intention is not always easy. For Discovery, however, there is a golden thread — a core purpose to make people healthier, and enhance and protect their lives. This purpose is cemented in every decision through a globally recognised shared-value insurance model.
In a move away from conventional banking, it’s this model that sits at the heart of Discovery Bank. Its philosophy is — the better its clients do, the more value the bank creates, which can be shared back with them.
“We operate in a landscape that now, more than ever, demands innovation and digitisation, but also purpose and being an active partner in the lives of modern consumers,” says Discovery Bank CEO Hylton Kallner.
Kallner says no other bank in SA has taken on the challenge of improving its clients’ financial wellbeing in a tangible way.
“Learning from the valuable changes we have seen among clients using Discovery’s behaviour-change platform in conjunction with its health administration products, short- and long-term insurance, and investment products, we saw the opportunity to keep elevating our purpose and shared-value business model.”
The bank’s value proposition is enhanced through an intuitive client experience underpinned by state-of-the-art technology. Also by Vitality Money, the bank’s behaviour-change programme that rewards clients for managing money well, staying fit, driving well and eating healthily — offering Discovery Miles, a rewards currency that can be monetised, earned or spent at Discovery’s suite of partners.
Since launching two years ago, Discovery Bank has attracted more than R6.3bn retail deposits, becoming the country’s fastest-growing bank in terms of deposits, with strong growth in client spend of more than R17bn, according to the SA Reserve Bank. It’s also experiencing a solid trajectory in credit use, with more than 565,000 accounts held by about 300,000 clients.
But what does it mean when a bank creates and shares value?
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Kallner says the idea is simple, explaining that when clients reduce their default risk or improve their financial position, the bank is more profitable and value is created, which can be shared back with the specific client that created it. The company’s success is directly linked to an individual client benefit and large-scale social progress.
In creating this value, Discovery Bank draws on behavioural economics to support, guide and incentivise people to manage their money well by changing five key behaviours:
- spending less than we earn;
- saving regularly;
- having insurance against unexpected events;
- paying off property sooner; and
- investing for the long term.
“These improved behaviours allow Discovery Bank to assess risk as something changing over time based on engagement in the artificial intelligence-powered Vitality Money tool. The outcome is that our clients experience greater financial wellbeing, it reduces the risk of defaults for Discovery Bank, making the business more sustainable, and it addresses large-scale challenges, such as increased savings, that benefits society,” says Kallner.
Discovery Bank’s shared-value approach and its operational model are already showing progress in transforming the banking landscape — moving away from a traditional banking model that gives clients little control over the benefits or rates they qualify for, and no guidance on how to change their banking risks to ensure greater financial support and benefits.
“It’s a new generation approach to banking and delivers on our core purpose to make a real difference in people’s lives. Last year, Discovery Bank clients earned more than 4-billion Discovery Miles and spent 3.1-billion Discovery Miles at the various Discovery Bank partners,” says Kallner.
“Clients were also rewarded with more than 1.6-billion Discovery Miles for healthy behaviour — this is the manifestation of our model with value that has been truly created and shared with our clients.”
This article was paid for by Discovery Bank.
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