DIS­COV­ERY

Financial Mail - - COVER STORY - Hanna Zi­ady zi­adyh@bdlive.co.za

When Dis­cov­ery’s Adrian Gore first an­nounced that the in­sur­ance group planned to launch a re­tail bank it caused quite a stir. It was Septem­ber 2015 and Gore (53) was pre­sent­ing yet an­other set of stel­lar fi­nan­cial re­sults — op­er­at­ing profit was up 17% that year — to a char­ac­ter­is­ti­cally full house of an­a­lysts, the me­dia and re­tail in­vestors.

No in­sur­ance com­pany can draw a crowd to its fi­nan­cial re­sults quite like Dis­cov­ery can. Even os­ten­si­ble ri­vals, such as Firstrand and Stan­dard Bank, in the typ­i­cally “sex­ier” bank­ing sec­tor, would come off sec­ond-best.

Peo­ple flock to Dis­cov­ery’s re­sults to watch Gore sell the story, tel­e­van­ge­list-style. In­evitably, new prod­ucts and in­ter­na­tional part­ner­ships are also an­nounced as in­vestors get a glimpse into Dis­cov­ery’s quest for world dom­i­na­tion. Glob­ally, think Ap­ple, un­der Tim Cook or Steve Jobs.

But ac­cus­tomed as in­vestors were to lights, cam­eras and lots of ac­tion, no-one was quite pre­pared for Gore’s bomb­shell that Dis­cov­ery would also be start­ing a bank. There was an au­di­ble gasp from the crowd; some seemed to have be­gun to clap.

Bank­ing CEOS, no doubt, shed a tear: Dis­cov­ery, the start-up that in­deli­bly dis­rupted the med­i­cal aid and in­sur­ance in­dus­tries, was plan­ning to bring that same dis­rup­tive force to bank­ing.

Fast-for­ward two years and Dis­cov­ery Bank, this month, be­came the sec­ond new bank to ob­tain a bank­ing li­cence from the Re­serve Bank.

It fol­lowed on the heels of Tymedig­i­tal, which ob­tained its bank­ing li­cence at the end of Septem­ber and plans to tar­get the lower-in­come seg­ment of the mar­ket, as well as small and medium-sized en­ter­prises. Com­mon­wealth Bank of Aus­tralia — the largest listed com­pany on the Aus­tralian Se­cu­ri­ties Ex­change — is Tymedig­i­tal’s ma­jor­ity share­holder, with Pa­trice Mot­sepe’s African Rain­bow Cap­i­tal In­vest­ments hold­ing a 10% stake.

Both banks will be branch­less. But un­like Tymedig­i­tal, Dis­cov­ery Bank will be go­ing af­ter the re­tail af­flu­ent mar-

What it means: Though Dis­cov­ery will be en­ter­ing a tougher field than when it launched its med­i­cal aid, its chances of suc­cess look good

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