Frank Rizzo- Discovery Bank: Bridging the Gap- Digital Banks' Role in Enhancing Financial Inclusion

Frank Rizzo, Chief Design Officer at Discovery Bank on Bridging the Gap- Digital Banks' Role in
Enhancing Financial Inclusion at Digital Finance Africa 2024 conferenc.

1. Bridging the Gap Digital Banks' Role in Enhancing Financial Inclusion Discovery Bank July 2024

2. Digital Banking has become a key catalyst for financial inclusion bringing banks closer to customers >22 000 000 3 345 29 000 Affordability Accessibility Financial Education Digital Physical 2 1 3

3. Digital banks drive three key components of financial inclusion Offering financial products and services at a fair and transparent cost , making them accessible to low-income individuals. Expanding access to financial services directly to the customer and democratising private banking. Empowering individuals with the knowledge and skills to make informed financial decisions and achieve their financial goals. Accessibility Education Affordability

4. Accessibility | Convenient and simple onboarding processes 24/7/365 Convenience Simplified Process 24/7/365 No physical documentation Fully secure and compliant Quick and easy onboarding Open a bank account conveniently from a smartphone 24/7 Availability on the banking app allowing for increased engagement with financial products vs limited Working hours for physical bank branches and limited proximity to bank ATMs

5. Affordability | Lower costs to access financial services and products RTC payment costs vs PayShap Cheaper access to investment platforms Cheaper access to financial documents Driven by 3 key factors and enablers PayShap has reduced average RTC costs from as high as R20 to only R6 per transaction -63% Digital innovations have reduced the cost of processing immediate payments Regulatory Changes aimed at promoting immediate payments, such as open banking Competition proliferation of fintech companies and digital payment providers Lower minimum investment value required Lower transaction fees Card Replacement: R145 VISA letter: R30 Bank Confirmation: R30 Statement: R45 Physical Branch costs Statement Requests: R0 Free Mobile Banking -94% -99%

6. Disrupting the typical cost convenience trade off Higher cost and less convenient TRADITIONAL DIGITAL Lower cost and more convenient Mass Market Private Bank Cost Convenience Increased Accessibility Democratised Private banking features

7. Education | Banking as an enabler of the Financial Wellness and Management Ecosystem Education and awareness Financial Tracking and Nudges Incentives Vitality Money Financial Analyser Budget trend analysis Excel Based Reports Up to 75% off 75% 35% 10% Shared value model

8. Number of Savings accounts Vitality Money Status Case study Lindi joined Discovery Bank in 2022 with the following profile: Meet Lindi Gold Transaction Bundled Account R8 350 monthly salary No Debt Participated in an online Financial Literacy course on the Banking App Blue Vitality Money Status Improved her savings, insurance, and property points where they went from zero to full points Financial status Improvement in just 20 months Lindi’s progress indicates a growing focus on financial planning and security 3x 5x

9. 5 Controllable behaviours 3 Conditions High Default Rates Impact of Vitality Money Discovery Bank’s hypothesis for a behavioural bank Unable to deal with unplanned expenses Not being protected in retirement Unsustainable amounts of debt 20% % 95% lower arrears rate Gold & Diamond vs Blue Having enough emergency savings Managing short-term debt Being on track for retirement Managing property investments and saving for the long-term Having the right types of insurance 80% of defaults