A “Behavioural Bank” for Achieving Financial Health
The South African insurance company Discovery unveils their own bank scheduled to launch in March 2019. A new approach to dealing with the banking industry as they describe it as the world’s first “behavioural bank”.
Discovery applies the concept of “nudge marketing” to a set of banking offerings, in line with their previous approach to the insurance sector with their “Vitality Shared-Value” insurance model. This launch involved a huge amount of research in behavioural sciences applied to their existing base of 300,000 credit card customers.
Their research allowed them to craft a model which in turn they will be applying to their banking system via “Vitality Money”. This full digital bank relies on behavioural sciences to improve customers’ financial health with two sets of offers:
- Dynamic interest rates: all interest rates applied by the bank will be linked to their customers’ financial behaviour: earning them more interest on savings and charging less interest on credit as they improve their financial behaviour.
- Dynamic discounts: special offers and discounts also based on customers’ financial behaviour.
The banking offer will include a bank account, a payment card, payment facilities, an instant payment feature, as well as banking options for families and multiple savings options.
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Addressing a social challenge: through analysing their own customers’ behaviour, Discovery designed an innovative market position (by assessing their customers’ unpaid monthly instalments, for instance).
The South African market is characterised by low savings rates (less than 4% of the population believe they are adequately prepared for retirement) and high debts (40% of the customers would be suffering from debt problems).
Discovery announced plans to launch a bank in the end of 2016. This project took a while to build and now comes to life with what seems like a one-of-a-kind offer.
Discovery will first be relying on their existing 300,000 cardholders as well as on roughly 1.7 million Vitality subscribers in South Africa. On a global level, their program combining insurance and health-related services became popular and met its public in Germany, in France, and even in the US. It now reports 11 million subscribers worldwide.