Discovery Bank nears 500,000 accounts – with further plans for Vitality Money expected soon

Discovery Bank continues to grow its client base, with the group approaching 500,000 accounts at mid-September.

The group, in reporting its full year results for the year ended June 2020, said it has 489,000 banking accounts, following the successful completion of its accounts migration process, where it moved over FNB Discovert Card clients to its platform.

The group reported 45,916 new clients over the period, with average customer advances of R20,500.

For the full year ended June 2020, the bank extended its operating loss by 296%, to a loss of R1.17 billion, from a prior loss of R296 million in 2019.

The loss is attributed to development costs, which include start-up business costs and expenses incurred to investigate, research and develop new products and markets. The year under review represents the first year of the Discovery Bank’s operation.

However, despite the operating loss, Discovery said the bank’s performance was pleasing, with deposits of R2.4 billion at full year (R3.7 billion at 13 September). Total credit limits granted were R5.5 billion of which R2.0 billion was utilised (R9.6 billion at 13 September with R3.7 billion utilised).

Given the onset of Covid-19, the bank said it implemented three strategies, namely;

  • Migrating over 220,000 Discovery Card accounts from First National Bank to Discovery Bank;
  • Following a deposit-led growth strategy, while ensuring the quality of the loan book and maintaining the quantum spent on the bank’s build within budget; and
  • Learning from the Shared-Value model to constantly improve the Bank’s user experience and value proposition.

By the reporting date, the migration was successfully completed and retail deposits exceeded the loan book, resulting in the bank having significant surplus liquidity of R3.8 billion and capital strength.

The loan book was “excellent”, the bank said, with arrears 60% lower than market arrears.

The bank said its value proposition has been significantly enhanced with a more accessible Vitality Money experience, Discovery Miles changes, and other user experience adjustments. The scope of these enhancements will be announced at the end of September 2020, it said.

Discovery said its banking clients also continued to show positive engagement with its model over the last year, with 82% of clients who activated the Vitality Money programme having a status higher than Blue. The quality of deposits at the bank has also been strong with 65% of deposits from clients with a Diamond Vitality Money status, the group said.

It said that it will further leverage this platform across the group’s client base.

“There is significant opportunity to leverage Discovery’s Shared Value composite model to increase product penetration and stickiness across Discovery’s high-quality customer base, with Discovery Bank serving as the monetisation and payment mechanism for the composite,” Discovery said.

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Discovery Bank nears 500,000 accounts – with further plans for Vitality Money expected soon