Discovery Bank eyes business banking expansion

Discovery Bank has plans over the medium to long term to enter business banking, with a specific focus on offering services to small-to-medium enterprises (SMEs). 

The bank has been hinting at this for a while, with both bank CEO Hylton Kallner and Discovery Group CEO Adrian Gore saying it is a natural growth opportunity. 

In his presentation to the UBS South Africa Financial Services Conference 2025, Kallner made this intention publicly known. 

Business expansion is the fourth step of Discovery Bank’s plan to reach its ambitious target of R3 billion in annual profit by the end of 2029. This follows from client and revenue growth, as well as margin expansion. 

As part of its business expansion, SME banking ranks highly for the bank, with it being a natural extension of its current offering. 

Kallner also noted that it enables the bank to tap into extensive client relationships with employers who are part of the Discovery Health Medical Scheme and other parts of the wider group. 

The bank is also able to leverage the 12,000 financial advisors linked to Discovery Group and the 45,000 healthcare practices associated with it. 

Further growth will come from additional products added to the banking platform, with Discovery’s insurance products increasingly offered through the bank. 

In an interview with Daily Investor, following Discovery’s annual results for the 2025 financial year, Kallner explained how the bank will expand into business banking.

This space is hotly contested by the traditional ‘Big Four’ banks, Absa, Standard Bank, FNB, and Nedbank, with Capitec also enjoying significant growth since it launched its offering in 2023. 

Kallner believes Discovery Bank can offer substantial value to clients through enhanced services and Discovery’s shared-value model. 

“In the medium to long term, SMEs and business banking is a natural growth opportunity for the bank. There is no doubt it’s got huge application,” Kallner said. 

“If you look at how clients are using the accounts, we are starting to see a lot of organic use from small businesses and sole proprietors in particular. They are using their personal accounts as a business banking account.”

Kallner said Discovery Bank will approach expanding in this sector in a similar fashion to how it has grown its retail banking business. 

“We have been very disciplined, very focused in our retail segment and, I think, in time we have definitely got optionality to expand it and we will do it in the same way – very deliberate and very disciplined,” Kallner said. 

“It will be innovation-driven and, hopefully, quite disruptive. But, I think at the moment, we have got quite a lot to do still.” 

Gore also hinted at a very deliberate expansion into business banking in the future, which will require increased investment in the bank. 

“The bank does not actually require any more investment from the group. It is fully self-sustaining and profitable on its own. It just generates cash now,” Gore told Daily Investor. 

“So, unless we are going to expand and get much bigger, by deciding to go into business banking – I don’t see that happening soon anyway – it does not require capital.” 

Discovery Bank’s path to R3 billion in annual profit by the end of 2029 can be seen in the graphic below from Kallner’s presentation at the UBS South Africa Financial Services Conference 2025. 

From zero to R3 billion in five years

Discovery Bank’s long-term plan to enter business banking forms part of its ambitious goal to reach R3 billion in annual profit by 2029. 

Kallner has previously explained to Daily Investor how it plans to reach this demanding target in the coming years, which assumes a R400 million growth in operating profit per annum over the next four years. 

The bank is currently on track to achieve this, with it rolling out new products and continuing to acquire around 1,000 clients a day. 

However, despite these high targets, Kallner has been clear that the bank will not pursue growth at all costs or compromise its high-quality client base. 

He expects the bank to continue growing at its current rate through the organic growth of its client base and by launching new products, which can then be sold to existing clients. 

Discovery Bank has managed to continue attracting high-quality clients to its platform by leveraging the wider group’s existing customer base. 

However, it is also increasingly attracting affluent customers from other banks, with around 60% of its clients completely new to the Discovery ecosystem. 

A big driver of this is its new home loan offering. Over 80% of these clients have switched their home loan from an existing financial services provider. 

With the launch of new products, the bank is increasingly becoming a platform on which it can cross-sell its own products as well as those from other parts of the Discovery business.

“I think given both the organic growth of the bank and additional products we make available to the client base, we can continue to grow this next phase and into the medium term without compromising quality,” Kallner said. 

“That is certainly our intention. We have always said we would rather grow a little bit slower but do it in a way that is prudent and of very high quality.” 

Kallner previously said the bank has no intention of expanding into vehicle and asset finance as it does not think it can offer its clients value in this space.

As part of its expansion, the bank will become the primary interface through which Discovery’s South African clients engage with all of the group’s offerings. 

Kallner explained that this is because the bank is the company’s most secure platform and has the infrastructure to facilitate client activity across the group. 

Crucially, it is the hub with the most data about Discovery’s clients through transactional banking and the payment rails used for its Discovery Miles ecosystem.

The banking app is also the most frequently used of all of Discovery’s services, with it almost being a daily occurrence for clients. 

Discovery Bank’s growth in the past financial year can be seen in the graph below.