Discovery Bank aims at FNB with home loan launch and Checkers partnership

Discovery Bank has aimed squarely at rival FNB with two new products which will be available to customers next year.

The bank has an overlap of clients with the FirstRand retail bank due to their credit card joint venture, which predates Discovery applying for its own banking licence. Since launching its bank, it has migrated somewhere between 250 000 and 300 000 of the old Discovery Card clients.

These customers either have a credit card or a transactional suite (including credit card), but to date Discovery Bank has not offered any lending beyond a single credit facility (which covers one’s credit card and overdraft).

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In an effort to close this gap with traditional rivals (particularly FNB), where many of its customers likely still have a mortgage and vehicle finance, it will now offer home loans through a partnership with SA Home Loans. (Capitec also uses SA Home Loans to offer this type of specialised credit to its customers).

Discovery contests that the introduction of home loans “means the Bank will provide a full suite of banking services to make it a full-service bank just four years since its official launch as a branchless, digital bank in 2019”. However, it does not yet provide structured vehicle finance (it assumes that its customers will use its credit facility to buy vehicles).

Home loan

The main selling point of Discovery Bank’s home loan is a reduction of up to 1.5% on the personalised interest rate offered to applicants. The type of banking product held, and the Vitality Money status of a customer, will determine the bulk of the reduction.

Customers with credit card accounts or transaction accounts with bundled fees will get a reduction of between 0.25% and 0.75%, while for banking suite product holders this will be between 0.5% and 1%. Holding home insurance with Discovery Insure will add a further 0.25% reduction, and the Discovery Life Home Loan Protector (credit life) another 0.25%.

It says this could translate into a client with a R2 million home loan saving R400 000 in interest over 20 years.

A preliminary quote will be available in the bank’s app within five minutes, and up to 100% loans are available for terms up to 30 years for new loans, switches or refinancing. Loans will have an access facility which ensures that any ‘prepaid’ funds (additional payments made) are accessible.

Read/listen: Managing your home loan as interest rates spike

Discovery says loans “will be administered by a dedicated SA Home Loans team” and that dedicated consultants will guide clients through a purchase or switch.

Discovery staff and financial advisors will be able to apply for home loans in a limited pilot until the end of the year, while clients “will be able to apply for a home loan through the bank’s call centre or with their Discovery Bank accredited financial adviser from the first quarter of 2024”.

Checkers … or chess?

The second salvo fired specifically at FNB is a partnership with Checkers that will go live “late 2024”. Vitality will expand its HealthyFood benefit to include Checkers and Checkers Sixty60, alongside existing partners Woolworths and Pick n Pay.

This is a major development given that Checkers (the entire Shoprite group) is an FNB eBucks partner, where account holders can earn up to 15% back on all purchases.

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With HealthyFood, Vitality members will choose a primary in-store partner (between Woolies, PnP and Checkers) and a primary online partner (Woolies Dash, PnP asap or Sixty60) where they can earn up to 25% back. They will get 10% back at other partners.

Read: Checkers runs rings around PnP, as Boxer and Shoprite neck-and-neck

The selected primary in-store and online partners can be different. Discovery says “almost 60% of Vitality members have different retailer preferences when they shop instore versus online”.

“For this reason, Discovery Vitality will give its members the ability to select both a preferred instore partner and a preferred online partner to maximise their HealthyFood rewards.” Translated: this means they prefer shopping in-store at Woolies and using Sixty60 for grocery deliveries.

The pervasiveness of Sixty60 is real, and the financial services group says “34% of Vitality members who ordered groceries online did so at least weekly”.

Read: Can anyone catch Checkers Sixty60? (Hint: No) 

It will also increase HealthyFood thresholds to R5 000 per family and R2 500 per individual from next year.

More Vitality

There are further Vitality fitness changes coming, with a limited number of annual free visits to over 400 fitness facilities (not Virgin Active or Planet Fitness gyms) across the country.

Discounts of 20% will be available on Africa Padel bookings.

It will also introduce new points allocations for ‘exercise snacking’, which is 15 minutes of moderate or high intensity workouts that earn 100 Vitality points, “as well as longer duration low intensity workouts that earn 200 and 300 Vitality points to encourage and recognise endurance training”.