Discovery is ‘live testing’ new bank capabilities as opening day nears

Discovery says it is live-testing its banking capabilities, testing “system infrastructure, operating processes and regulatory engagement”.

The insurer will launch its proposed banking offering to the public during 2018. Spend to date is R1.2 billion and this is expected to reach R1.5 billion by launch, it said in a statement on Tuesday.

On 16 October 2017, Discovery Bank was granted a banking licence from the Registrar of Banks.

Discovery CEO, Adrian Gore first announced plans for a retail bank in 2015, and stated that it would act as a direct competitor to Absa, FNB, Nedbank, Capitec, and Standard Bank.

The insurer has reportedly seen great success with its Discovery Card joint venture with FNB, which would provide a launch pad for full banking services.

“We’ve got the capital, we’ve hired bankers, we’re building substantial systems. We want to make an offering that’s relevant and can win market share,” Gore has previously said.

On Tuesday, Discovery published its interim financial results for the six months ended December 2017, with normalised profit from operations up 19% to R4.059 billion, while insurance premium revenue climbed to R17.76 billion, from R16.65 billion before.

Diluted normalised headline earnings per share advanced 29% to 438.3 cents per share versus 338.6 cents previously.

Core new business annualised premium income (API)  was up 16% to R9.303 billion.

Discovery said of its new banking venture: “Over the six-month period, management worked alongside regulators and industry associations to obtain the required licences and perform associated testing.”

It said that in addition to its banking licence, Discovery Bank has received the following licences/memberships:

  • National Credit Act (NCA), which facilitates the advancement of credit to the public.
  • SAMOS (South African Multiple Options Settlement), which allows Discovery Bank to settle transactions with other banks within South Africa; and enables it to be a settlement bank from date of launch.
  • SWIFT (Society of Worldwide Interbank Financial Telecommunication), which allows Discovery Bank to transact on the SAMOS systems with the SARB.
  • PASA (Payments System of South Africa), reflecting that the business is able to conform to the rules and conventions necessary to process specified payments, e.g. EFT transactions, debit orders.
  • Visa Principal Issuer licence, with Discovery Bank receiving its globally unique six-digit BIN-number for both credit and debit cards.
  • ‘Restricted Authorised Dealer in Foreign Exchange’ granted by the Financial Surveillance Department of the SARB Exchange Control.

Read: Michael Jordaan is launching a new bank in SA – Bank Zero

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Discovery is ‘live testing’ new bank capabilities as opening day nears