The newly-launched Discovery Bank aims to extend the group’s Vitality model to track, influence and reward customer behavior.
Adrian Gore, CEO of Discovery Group, says the bank heralds a new category in global banking, acting as the first behavioural bank.
“In the same way that we aimed to address the negative impact of human behaviour on health risk and the sub-optimal design of insurance systems through our shared-value Insurance model; Discovery Bank aims to do the same in the context of financial risk and banking systems.”
The new bank will be accessed via a mobile app; it will have just one branch – at a location to be announced later – and no ATMs (automated teller machines) of its own.
The foundation of the bank is technology, he adds, and it has been built from the ground up to embrace the wealth of data held by Discovery and leverage algorithms to reward the behavior deemed to be most desirable.
Barry Hore, CEO of Discovery Bank, comments; “Discovery Bank is building a banking system from the ground up; incorporating the latest in banking technology to create a mobile-first bank, to meet the sophisticated, personalised banking needs of individuals through a branchless structure, supported by an omni-channel service capability.”
Gore says the initial target market for the bank will be members of the group’s other offerings, most specifically Discovery Health. And customer rewards will e cumulative across the different platforms.
Gore says the group’s expertise in behavioural science and incentive design are the core mechanism underpinning the Bank’s behavioural differentiation. T
he product design addresses financial risk by collating and characterising financial behaviour according to the 5-3-80 model of financial health.
Five controllable behaviours of spending less than we earn: saving regularly; having insurance in place for serious events; paying off property and investing for the long term; can alleviate three key risks of unaffordable debt; exposure to unexpected expenses; and insufficient income in retirement.
These risks result in 80% of events where individuals are not able to meet their financial obligations.
The Bank’s behaviour-change programme, Vitality Money, will guide and incentivise consumers to achieve better financial health and resilience.
Under this model, interest rates are linked directly to clients’ financial behaviour; enabling them to earn more interest on savings and to pay less interest on credit as they improve their financial behaviour with Vitality Money.
The bank leverages the Vitality partner chassis to create an ecosystem of rewards for clients in the form of dynamic discounts that deepen Vitality’s incentives.
The rewards structure is paired with banking technology; offering smart banking products with both transactional and credit card capabilities, a single credit facility, multiple ways to pay instantly, banking options for families and multiple savings options with dynamic interest rates – all accessible in realtime on the Discovery Bank app.