Discovery has received authorisation from the Registrar of Banks to establish banking operations in South Africa, and is on track to launch its banking products next year.
This is according to Discovery CEO Adrian Gore, who said they are deep into the preparation phase of the new bank.
Gore said it is a complicated process to assemble the right team, build the systems to support the bank, and develop products which clients need.
Despite the complications, he remains upbeat about the prospects of Discovery Bank – saying it is an exciting project.
“We need to meet the needs of our customers. I think we can. We have strong ideas and convictions about that. If we can do that, the market will tell us,” said Gore.
Discovery announced its plan to establish a retail bank in 2015, which will compete against Absa, FNB, Nedbank, Capitec, and Standard Bank.
Gore said they had tremendous success with their joint venture with FNB on the Discovery Card, which provides them with a launch pad for full banking services.
“We’ve got the capital, we’ve hired bankers, we’re building substantial systems. We want to make an offering that’s relevant and can win market share,” said Gore.
Discovery has an advantage over the big four traditional banks, as it does not have to maintain a country-wide network of branches and ATMs.
This means Discovery Bank’s costs will be lower than its competitors.
Former FNB CEO Michael Jordaan, who was behind making FNB the most innovative bank in the world, said the Discovery Bank has great potential.
“I think that Discovery Bank has the potential to be a big disruptor and a huge success, as it has been in other pockets of the financial services industry,” Jordaan told MyBroadband.
Jordaan told Business Times that Discovery can use its lower cost base to offer clients lower banking fees and better interest rates.