JOHANNESBURG – Last week Discovery was in the news a lot with the launch of its long-awaited retail bank.
Discovery, known mainly as a medical insurer, has now become a proper technology company, encompassing artificial intelligence through all its business units.
But artificial intelligence and technology are not only for the First World. Discovery has been disruptive everywhere it goes. It's turning traditional insurance upside down, with a good example being its driving app, which registers behaviour on the road.
Some might see this as a disadvantage, but it will benefit well-behaved drivers and lower their premiums through cash-back incentives.
Sensors in your phone pick up motions in your car and key driving habits, and whether you're texting while driving. How you brake, how you corner, how you accelerate, the time of day you drive. This information is used in an actuarial algorithm to give you a unique driver score. All the driver has to do is download the app.
It's all about calculating your risk of having an accident and having an insurance claim.
Discovery knows all about your health and how often you go to the gym. If it can measure your driving habits as well, it will probably influence your banking benefits too. A well-behaved person with self-discipline will probably get a loan from their bank with less effort.
Discovery's price has been volatile this year, in line with the market. The company's results were fundamentally better than most of its peers, which shows that it's gaining a competitive advantage.
The bank has good prospects, as it already has a captured clientele through its credit card, which has been going for many years, in conjunction with First National Bank.
An advantage that will probably make it perform better than new competitors Bank Zero, TymeBank and Postbank lies waiting on the horizon. Discovery is one of the few South African companies enjoying success beyond our borders. All of its emerging businesses are profitable and did better than expected.
At the last results presentation, Adrian Gore described one of the highlights as being the performance of Ping An Bank in China, which is delivering exponential growth.
Discovery owns 25percent in Ping An, and it increased its new business by 95 percent to $443m. The company's premium income also increased by 87percent.
Gore said during the results presentation that Ping An’s revenue for the first seven months of 2017 had already exceeded the revenue generated during the whole of 2017.
“The progression of the group across the board was good. Every business was positive, and every business performed in line with expectations or beat them,” said Gore.
* Amelia Morgenrood is a PSG Wealth financial adviser based in Pretoria. Views are of the author and not necessarily the general view of the entire PSG entity. Discovery shares are held on behalf of clients.