Discovery to invest R270 million more into new bank ahead of launch next month

Discovery said Friday that it will continue to invest in its new digital bank ahead of launch in March, following a beta testing phase.

In a note on the Stock Exchange News Service (SENS), Discovery said that for the six months ended December 2018, Discovery’s normalised headline earnings per share is expected to decrease by approximately 16% to 366.6 cents (2017: 438.5 cents)

“For its 2019 financial year, Discovery planned to increase investment into new strategic initiatives significantly, most notably the build and launch of Discovery Bank, creating an expected reduction in group earnings,” Discovery said.

It said that spend on five key new businesses increased significantly over the period and will amount to approximately 21% of group earnings (including 3% from the associated financing costs).

“The most notable initiative is Discovery Bank, which was launched in November 2018 for beta testing, and is expected to roll-out to the public in March 2019 – the cost incurred in the build, test and run phases of the bank have largely been in line with expectations.

“Discovery estimates a further R90 million to be spent on build until the public roll out and a further R180 million on test and run.”

It said that the spend on new businesses is in line with budget and is fully provided for in the group’s capital plan.

In November, the financial services group showcased its digital-only banking product, which aims to make banking more efficient, and move away from traditional banking silos through introducing rewards-based incentives to encourage behavioural change when it comes to money.

Discovery CEO, Adrian Gore said that the bank will go into a beta-testing phase, with an eye to launch to the public in March 2019.

He said that the “soft spot” for accruing customers is through existing clients – the bank has 300,000 card customers, and just over two million Discovery customers in total. Gore said that the bank could develop a very loyal market.

Read: Discovery Bank to launch in March 2019 – here’s what you need to know

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Discovery to invest R270 million more into new bank ahead of launch next month