Banking & Capital Markets

Changing behavior is never easy. Often, people require compelling incentives to adjust their lifestyle choices for the better.

Today, technology has enabled people to make essential lifestyle changes faster and in a highly personalized manner. Digital tools that allow people to track their fitness levels, dietary habits, sleeping patterns, and more, have increased individual’s awareness of how good habits can positively influence their overall well-being.

Alongside improved lifestyle routines, financial well-being is a vital component of people’s happiness, productivity and social engagement levels.

However, most people lack the kind of financial literacy they need to make confident, well-informed money-related decisions. They may know that it’s sensible to save, but not how to make the most of their savings to maximize their financial security for both the short- and long-term.

South Africa-based insurance organization, Discovery Group, recognized this challenge. Much as insurance can save a lot of stress and money in the long run by providing a safety net, so too can better financial management. This is part of the reason why Discovery decided to place customer behavior at the center of its new bank’s operating model.

Building a viable business case

EY’s first step in its journey with Discovery Bank focused on helping it prepare for its banking license submission. Besides meeting the normal compliance requirements for such an application, some of the main challenges to emerge related to the regulator’s concerns about how such a digital bank would operate in practice, and if it would pose any systemic risk to South Africa’s banking sector.

In its effort to reassure the regulator, EY focused on building a clear business case with the bank, demonstrating the benefits of Discovery’s Vitality approach, as well as how it would comply with South Africa’s regulatory environment.

However, building a business case for a skeptical regulator was not the only challenge – if regulators wanted reassurance, so would the customers this new bank was being designed to help.

Choosing a new design

The EY Seren team – EY’s specialist customer experience agency that travelled from the UK to spend several months with the Discovery Bank team in South Africa – helped the bank explain the idea of a data-led behavorial bank to potential customers. The team began by spending a month going out and talking to various customer target groups to fully understand what people really needed from a bank to:

• Define a new customer experience for a behavorial bank
• Identify the most appropriate channels for delivery
• Develop a simple account proposition for the bank

The EY Seren team’s success in engaging customers in the bank’s philosophy gave Discovery confidence in putting behavior at the heart of its operating model.

With that, the bank asked the EY Seren team to train its own people to create an in-house service design team. This included:

• How to interview potential customers
• How to understand a customer journey
• How a customer journey can be mapped out
• How to start building an operating model around the kind of customer experience the bank wanted to create

In outlining the benefits of a digital-first, customer-centric approach in the license application, EY helped to satisfy the regulator that Discovery Bank’s operating model would greatly enhance South African’s banking experience.

Implementing the technology architecture

Parallel to the license application process, EY worked on administering the right technology architecture for the bank. This meant creating a team of different EY subject-matter experts in quality assurance, banking and technology, who worked together to assess how best to implement SAP’s core banking technology.

One of the main benefits of working with SAP is its capacity to hold all of the bank’s customer information in one database – a key requirement for a digital bank. This gives Discovery the advantage of being able to produce better banking products, analytics and insights to serve customers better.

Working together with EY, SAP devised 12 test case user scenarios to thoroughly examine whether the banking platform could support the key requirements of Discovery’s customer-centric operating model, including:

• Dynamic and variable pricing for products
• Acquiring clients
• Servicing clients
• Closing accounts
  
• Managing transactions
• Government compliance and risk requirements
• Call center and marketing technological needs

This ensured the focus remained on customer behavior – as well as that each subsequent product would work seamlessly with the bank’s Vitality platform.