Health, wealth and wisdom
It is unlikely to break even for five years, but the bank will enable cross-selling with Discovery’s insurance and medical aid bases
By September, the eagerly awaited launch of a new SA bank will go live. But it won’t be easy.
“We don’t have any illusions. We know how difficult it is to persuade people to move banks. The established banks are super strong and there are a number of disrupters,” says Discovery CEO Adrian Gore.
Gore announced the intention to form Discovery Bank two years ago. It will be part of the R114bn market cap of Discovery Group. Prelaunch spending will reach R1.5bn.
In an interview, Gore said it would have been simpler to go into a joint venture, perhaps with FNB, which currently operates the Discovery credit card. Instead, Discovery chose to build the bank from the ground up.
“This is certainly the most complex business we have ever gone into, and the most hotly contested space,” says Gore. “We have done a great job at the plumbing.
“We have now got to get interest from the public.”
In practical terms, the first of Discovery Bank’s products will be its existing credit card book, but Discovery can only buy it from FNB after it obtains competition commission approval. It is already a Visa principal issuer with its own bank identification number, and it can settle transactions with other banks.
It has been approved by the national credit regulator to be a lender and is an authorised dealer in foreign exchange. It will, from day one, be able to offer cards, secured and unsecured loans, transactions with other banks and foreign exchange.
Other disrupters to the banking sector won’t make Discovery’s launch easy. These include Tymedigital by Commonwealth Bank of Australia, and former FNB head Michael Jordaan’s Bank Zero.
But Gore says Discovery has a specific shared-value approach and a core target market in the mass affluent