Discovery Bank’s exceptional growth

Discovery Bank launched in November 2018, and its growth has exceeded expectations. The digital bank will officially reach the milestone of one million clients in August 2024 — a goal it had set for 2026.

The digital bank hit one million accounts in June 2022 and has rapidly added customers since, reaching two million accounts in less than two years later.

Discovery Bank CEO Hylton Kallner told MyBroadband that the bank expects to hit one million clients this month, over a year earlier than anticipated.

Kallner noted that retail deposits in the first half of 2024 grew by 31% to 16.65 billion, while advances grew by 20% to 5.75 billion.

It’s important to differentiate between clients and accounts. One client can hold multiple accounts, and the bank announced the milestone of two million accounts in February 2024.

“Discovery Bank has reached the milestone of 2 million accounts — after announcing our first million accounts in June 2022. What’s most exciting is that the last 100,000 accounts came in just 41 days!” it said.

The bank is also reducing its operating losses at a rate that has exceeded expectations. Its latest full-year results revealed that its operating loss had dropped to R767 million for the year ended 30 June 2023 from R990 million the year prior.

“Discovery Bank’s operating loss was 23% better than the prior year, and the operating loss before new business acquisition costs was 39% better than the prior year, as growth continued to exceed expectations,” it said.

It also noted that its client acquisition had accelerated and met Discovery Bank’s medium-term target of adding 1,000 new clients per day during the period from January to June 2023.

It said the acquisition rate was 50% higher than during the same period in 2022.

In February 2022, Discovery CEO Adrian Gore said Discovery Bank was showing “amazing data” despite reporting operating losses yearly.

However, operating losses are expected.

In comparison, TymeBank — a competing digital bank — launched in February 2019 and reached profitability in December 2023. This was heralded as a massive achievement in such a short period.

Discovery Bank’s behavioural banking approach means its systems are more complex in comparison. Gore said Discovery Bank was exceeding its growth plan.

“The driving factor for the bank is its ability to acquire clients and to enable clients to use the bank,” he said.

“I do not believe you can build a bank of very skinny accounts and people subscribing but not using the bank.”

He added that Discovery Bank excels in offering propositions that people use, adding that the bank is ahead of its growth plan in every aspect.

This includes client acquisition, deposit amounts, and people using the bank.

Discovery Bank’s value proposition is closely linked to its Vitality Money and Discovery Miles incentive programmes. Gore said the company sees a strong correlation between banking behaviour and clients’ Vitality Money status.

“The segmentation of clients in an accurate way is taking place through Vitality Money,” said Gore.

“The key issue for our clients is the value proposition — if you manage your money well, you will be rewarded.”

Discovery Bank faced some delays surrounding its launch. From its soft launch in November 2018, it limited clients to 1,000. It planned to start onboarding more customers in early 2019.

However, it only opened to new clients in July 2019, following an extended early testing period.

“The early onboarding phase — limited to 1,000 clients — was longer than planned, however was vital,” said Gore.

He explained that the company built a behavioural bank with more than 120 distinct and connected systems.

This required Discovery Bank to finalise four structural factors relating to the bank: the integration of full-scale digital banking into the Discovery ecosystem, the systems and technology infrastructure, the rewards architecture, and the migration of existing Discovery Card holders.