Financial services group Discovery has expressed satisfaction with the test and run phase of its eagerly awaited bank offering, which is expected to be rolled out next month.
The group said in a trading statement on Friday that it had spent 21 percent of its total earnings in the six months ended December on new business initiatives that include the bank.
It said four more initiatives were launched during the period.
“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 said.
“Discovery estimates a further R90 million to be spent on build until the public roll out and a further R180m on test and run.”
The group said that it had extended its reach by launching Vitality Invest, Vitality 1 (the global technology platform), Umbrella Funds and Discovery for Business.
It said the digital bank, which it described as a “behavioural bank”, would be open to anyone with a smartphone.
The launch of the bank is a new addition the digital banking trend that has gripped South Africa. Other entrants are Bank Zero and TymeBank, which is backed by billionaire Patrice Motsepe.
TymeBank would go live this week in 500 Pick n Pay and Boxer stores in preparation for the formal launch this month.
Dominique Collett, a senior investment executive at Rand Merchant Investments, said the introduction of TymeBank, Bank Zero and Discovery Bank would shake up the industry and give customers greater choice.
“We also anticipate new entrants from other industries – mobile network operators are re-looking at mobile money products that focus on payments offerings. Other non-bank players such as insurers and retailers will continue to advance into the banking space,” Collet added.
The banking sector has not seen major disruption since bluechip company Capitec burst on to the scene in the early 2000s.
Capitec last year said that it had attracted nearly 110 000 new clients each month for the six months that ended in August 2018 for a review to end the period with 10.5 million customers.
Andy Wilson, financial services intelligent digital Leader for PricewaterhouseCoopers Africa, said an agile mindset had become key to success in the financial services sector.
“To be competitive in tomorrow’s financial services industry, banks and insurers must be able to rapidly deliver a simple, seamless and instant customer experience at a competitive cost,” Wilson said.
“Financial institutions are also confronting new disruptive technologies developing at an exponential pace, new forms of regulations, the continuous rise of fintechs and the threats of big techs.” Discovery shares declined 1.57 percent on the JSE on Friday to close at R142.72.