“There are over 22 million smartphones in South Africa today. Each one of them holds the same power that physical banks had historically,” says Hylton Kallner, Discovery Bank CEO. Referencing the bank’s latest piece of research in partnership with the Boston Consulting Group (BCG), The Future of Retail Banking in South Africa, Kallner speaks of a quantum leap that occurs when you surpass the limitations of a bank’s physical infrastructure and enter the world of your client, digitally.
While unpacking the ever-expanding benefits of the evolution of retail banking, he identified five key vectors: access, security, financial management, customer service and cost – in which a notable shift in the digital space creates unlimited opportunities to improve people’s banking experiences and their lives.
Previously, within a traditional banking environment, the number of steps to a brick-and-mortar branch would determine your choice of bank. Today, it’s the number of taps – on a mobile device – to open a bank account that significantly influences a person’s choice of banking partner. With Discovery Bank’s continuous quest for more innovative solutions and their digital contributions – like Facial ID and geolocation – which have replaced the need for proof of residence, the bank’s customers have a quicker, more straightforward way to sign up and transact at a time that is most convenient for them.
What’s more, customers are no longer beholden to traditional banking hours. “Joining a bank or opening an account can now happen at any time of the day. In fact, we have seen that up to 50% of customers that onboard themselves, do so after business hours or over weekends,” notes Kallner.
The digital shift affords the same level of sophistication in a retail bank account that we previously would have had in a corporate managing entire software packages. “From using your bank account as a filing system to accessing real-time budgeting enabled by machine learning systems that notify you as you near your set budget limits, digital banking enables a virtuous cycle of managing your money better with digital tools,” says Kallner.
One of the leading benefits in the context of retail banking of the future is security. With real-time monitoring through velocity and value algorithms, you are afforded a significantly higher level of security and protection for yourself and your funds. “The traditional response to risk is often thicker glass, double entry doors or hiding your ATM pass code. The mobile brings a far higher degree of veracity and security,” says Kallner. “Not only are you not exposed to physical risks, the digital protection that you get through things like two- and three-factor authentication, where we are able to verify that it is you making the transaction, at a specific place, at a particular time on multiple devices, provides a level of verification that wasn’t ever possible in a physical world.”
Being able to access your bank account 24/7, wherever you are enables a much higher level of engagement and service. When compared with other digital-first banks around the globe, the Discovery Bank app ranks highly, with a 4.8-star rating on the Apple App Store and 4.4 star rating on Google Play, the highest-ranking bank app in South Africa. “When you juxtapose the scenario of having to go into a bank, wait in a queue and speak to somebody who may or may not be able to solve your problem, with contacting a call centre where the waiting time is between 10 and 30 seconds to get your call answered, being able to be coached through the process on your mobile device using mirror image technology (as if you were face-to-face), you begin to understand the true value of client service,” says Kallner.
The cost structure of a traditional branch infrastructure and what is now available to clients at a far more affordable level through digital banking, are worlds apart. The comparison becomes even more apparent when you compare an expensive service model with a fixed cost basis and a super-fast and efficient digital system. “When it comes to more complex transactions like Forex, which has millions of permutations, performing this digitally brings with it a 3% to 4% saving in terms of the friction cost,” says Kallner. “You start to see the system becoming much cheaper with removing friction and with that you start to get real client benefits, increased transparency and the ability to understand and compare these costs.”
Discovery Bank has combined the latest technology with sophisticated, personal client service operations – including private bankers – to deliver a full-service offering that now enables the operating system for the whole Discovery South Africa group.
“Through our shared-value banking model, we have been able to support and reward our clients for managing their money well and grow to over 1 million accounts and over R11 billion in deposits,” Kallner shares. “This is the future of banking, and we’re excited to be a part of it.”