About
A shared-value model in banking provides an effective platform to initiate change clients need to make to improve their financial health. By providing incentives for individuals to make better financial decisions, a shared-value model in banking can generate higher savings levels, lower risk of default and increase wealth and financial resilience for society as a whole. Discovery Bank’s Shared-value Banking model leverages our proprietary behavioural change programme – Vitality Money to measure how financially healthy clients are, and in turn, reward them for managing their money well. It's simple, we believe that we'll do well when our clients do well, and society will benefit too. It's a win-win-win.
Innovation presentation
Concept and objectives:
We set out to create a shared-value bank – that incentivises and rewards clients for improving their financial wellness, thereby resulting in lower defaults for the bank and higher profitability.
Reasons behind:
High rates of debt and low savings have contributed to a breakdown in trust between banks and society. Only one-third of millennials trust the banks they are with. Companies with high environmental, social, and corporate governance (ESG) rankings are more resilient in crises, and clients are demanding that their companies, including their banks, focus on societal issues as much as profits.
State of competition
Banking has stayed the same for hundreds of years, with traditional banks segmenting and pricing clients based on their socio-economic status which they categorise through income, education, and employment. Traditional Banks relegate corporate social responsibility (CSR) activities as an ad-on “investor tick-box” exercise. Discovery Bank believes that Banking is about financial wellbeing and building a community of people who manage their money well - making a meaningful impact in society. Shared value, which integrates social impact with core product strategy, has resonated deeply with both the clients, shareholders and society demonstrating the power of connecting social progress to a profitable, scalable business model.
For the first time in history, through Vitality Money – a global first behaviour-based financial wellness programme, which is an innovative offering that was based off in depth research, analytics and modelling and uses sophisticated technology to give us access to real time, synthesised financial data that enables us to determine our clients’ financial health automatically and accurately. Discovery Bank can share the value that our clients create by managing their money well as measured through the Vitality Money programme, back with them through unprecedented interest rates, retail and travel discounts, fuel discounts and many other rewards.
Clients unlock the power of Vitality Money, a powerful personalised programme designed for everyone, that rewards clients for managing their money well. Vitality Money also guides clients and gives them the tools to know where to focus, with rewards along the way.
Source of Inspiration
Discovery’s core purpose is to make people healthier and to enhance and protect their lives. We pioneered the concept of shared-value in health and life insurance. Our shared value insurance model has been exported to over 30 countries globally as an actuarially behavioural change programme that improves its clients’ lives which then results in superior profits for the insurer.
Discovery Bank was created to replicate the shared-value model in banking. Could we incentivise clients to behave better financially which would translate to a higher level of consumer engagement and lower bad debts for the Bank. That's why we've created Vitality Money. Through Vitality Money, we put the power to develop good financial habits in our clients’ hands with financial education courses, and easy-to-use tools such as retirement age calculators, financial health assessments, and real-time tracking on the Discovery Bank app.
Results:
Sharing value through rewards along with simple and intuitive digital banking experience has resulted in Discovery Bank growing to over 350,000 clients and 676 000 accounts since launching in 2019. The bank has the fastest growing deposit book in the country with over 478 million Euros in deposits as of August 2021 with over 591 million Euros of credit limits granted to clients. Clients that engage are 99% less likely to default on their loans than clients that do not.
Uniqueness of the project
From the outset, we designed Discovery Bank differently – as a Shared-value bank. In essence, we create value for our clients by getting them to behave better. When clients manage their key financial behaviours well, like saving and not spending more than they earn, they become more financially successful and secure. This allows us to share more value with clients through a range of enhanced lifestyle, travel and other rewards and interest rate benefits that further support their financial success. By helping clients achieve financial success, we help create a better, stronger society together.
We use state of the art digital technology, which is embedded within the Vitality Money tool, to help create a financial picture of our clients in real time, by integrating with various partners such as credit bureaus, property valuation firms and investment aggregators. Each client gets a unique personalised financial assessment of their financial health and are individually scored, which then determines their Vitality Money status.
At Discovery Bank we use data analytics and machine learning to drive our algorithms that determines a clients financial wellbeing score. We measure client’s financial health based on five behaviours and award a single Vitality Money Status – Blue, Bronze, Silver, Gold or Diamond. The higher a client’s Vitality Money status, the clearer the correlation that they manage their money well.
Finances are complex – we make it simple by getting clients to understand a single metric that can give them an indication of the state of their financial-being – their Vitality Money status. Once clients are engaged, there are a series of videos that will help clients understand how to improve their financial behaviour to help them stay on track for better financial health.
Discovery Bank also offer a host of user-friendly financial management tools such as a Financial Analyser – that allows clients to analyse their daily spend per automated category, a Retirement Calculator – that clients can use to track their progression towards their retirement goals and a Risk Capacity Calculator – that measures client’s long-term financial health and their capacity to take risks with their investments.
