Social media went abuzz with the launch of the long awaited Discovery Bank, with most people saying that the “South African Banking Industry is officially shook”. Whilst critics say there’s nothing new that the bank is providing consumers. However the bank promise is that good financial behavior needs to be rewarded. This stems from Discovery Health, where members are rewarded for achieving their fitness goals through the Vitality reward systems.
A lot has been said about the bank but below are some of the interesting things to know about Discovery Bank.
According to Adrian Gore – Discovery CEO technology will be at the forefront the Discovery Bank, with everything accessible on the face of mobile phone. It is the world’s first bank built on behavioral model. Smart algorithms will determine how much vitality and discount consumers get depending on their “financial health”. You can open an account following five steps on the app. This feature will however be open to the public in 2019 as it is still in Beta phase.
10% of the bank will be owned by black depositors
The exact details of how this is going to happen are not yet, however Gore stressed that it is not going to be BEE scheme. However the intention is that when black depositors join the bank, they will be given a share of the equity based on certain parameters.
The fee and interest rate structure were not communicated at the launch however Gore said it would be market-related closely linked with the client’s vitality status.
Discovery has literally turned the banking industry upside down by introducing a vertical bank card instead of the conventional horizontal card as most banks do.
The bank won’t have ATMs just like Investec however clients can use the vertical card withdraw cash from any ATM and there are plans for Discovery to set a branch at their headquarters in Sandton.
Anyone can be a client
The target market for the Discovery Bank is very broad, from low LSMs to high LSMs.
Does Discovery Bank get a Pat or a Slap?
Saying the Discovery Bank gets a Pat will be a premature celebration as the bank has not revealed a lot of information about the fee structure, which is what most are concerned about. However, the good thing is that the bank aims to encourage people to spend less they earn, which is a good thing given that most South Africans are over indebted. Also, the business model of most existing banks is to get more to take debt so that they can make more money through interest. On the other hand one cannot also give it a Slap because it hasn’t failed (yet) at delivering on its promises. History will be the judge.
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