Adrian Gore on Discovery Bank’s controversial BEE scheme

Discovery CEO Adrian Gore says that the group’s new banking venture is all about inclusivity – and has clarified some misconceptions about the group’s controversial BEE scheme.

Discovery Bank was officially unveiled in November 2018, offering a completely digital banking service with products designed to improve the money management of clients.

It claims to be the world’s first “behavioural bank”, which will reward clients for healthy life choices and good financial decisions.

However, the group has sparked some controversy with one of its value propositions – a BEE scheme that will give black depositors 10% equity in the business.

When initially unveiled, Discovery said that these depositors would be able to take part in the scheme without any cost or risk to them.

This led to opposition from organisations such as Solidarity, who launched campaigns and erected billboards imploring white people – who are excluded from the scheme – from signing up with the new bank.

Gore moved to clarify some details around the scheme. “The BEE scheme is something that we’re doing for two distinct reasons,” he said.

“The first is the social imperative – we need transformation. To build a stable and secure South Africa we need transformation and growth, and Discovery is investing R13 billion in the country over the next five years.”

The second point, Gore said, is the legislative reality that the bank is launching in.

“We are required to empower the bank, the bank required direct black shareholding – and we’ve given our commitment to the regulator the we will do that. So there’s a social imperative and a legislative imperative,” he said.

Gore said the only question that remained is how to do it.

“We did a lot of analysis on how to do it. One approach is a very narrow approach, where you have a majority black shareholding entity that has shareholding in the bank. There’s nothing wrong with that – but we like a broad-based approach,” he said.

The CEO explained that the idea of empowering 30,000 people through its share scheme is better approach for its goals, which would also draw people to be customers of the bank itself.

Gore also dismissed the perception that the share scheme was a “hand-out” and that black depositors would be getting Discovery shares for free.

“You need to meet eligibility requirements, firstly – and secondly, it’s a vendor-finance scheme, so you are paying for the shares that you are getting, and you will get the gain as the bank grows.”

“This is not about a hand-out in any way,” he said.

The bank previously said that it was in the process of finalising the details and participation rules of the scheme, “which will be announced in due course”.

“Any comments about the participation and qualification criteria of the scheme prior to finalisation by any external parties are therefore premature,” it said.

Read: Vitality Money will be a ‘game changer’ for Discovery Bank

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Adrian Gore on Discovery Bank’s controversial BEE scheme