Discovery has released its interim results for the six months ended 31 December 2019, which showed that Discovery Bank now has 78,000 clients with 180,000 accounts.
Discovery Bank was launched in November 2018 with products designed to improve the money management of clients.
Discovery Bank is built around behavioural economics and leverages a similar rewards model to the company’s Vitality programme.
After a testing phase, Discovery Bank opened its platform for new sign-ups on 1 July 2019. The aim was to sign up 1,000 new customers every day by the end of August 2019.
The bank missed this target. With 78,000 clients since it first opened its doors, sign-ups were slower than expected.
There are, however, some encouraging signs. Nearly half of Discovery Bank’s clients had never held a Discovery Card before.
Deposits had also grown strongly to R1.2 billion, total credit card spend was R2.6 billion, and total credit limit granted was R2.5 billion.
“Early member engagement is positive, and the client base is exhibiting appealing spend, credit, arrears, and deposit behaviour,” Discovery said.
It added that Discovery Bank’s performance is better than the performance of the previous Discovery Card and considerably better than the market.
Discovery remains upbeat about Discovery Bank’s prospects. “Growth potential is strong with over 200,000 accounts that still need to be migrated from the FNB Joint Venture,” it said.
It will also activate the Discovery advisor channels to sell bank accounts in the second half of the year.
Vitality Shared-Value model is working
Discovery said early indications are encouraging that the Vitality Shared-Value model is working in banking.
With this model interest rates and incentives are tiered by financial behaviour and wellness as measured through Vitality Money.
“Strong correlations are being observed by Vitality Money status in credit utilisation, deposits, spending and defaults – across the client base and account types,” Discovery said.
It added that engagement and correlations are even stronger for clients with multiple Vitality products.