Expanding the financial service offering

South Africa's leading life insurance companies are quietly expanding their financial product offerings. Discovery, Metropolitan and Sanlam are all exploring ways to leverage their loyal customer bases by offering additional financial services.

The life insurance industry has been under significant pressure in recent times so it makes sense for the larger industry players to attempt to secure a share of the lucrative South African credit market. Sanlam already has a healthy R4 billion home loan book and is said to have extended as much as R1.5 billion in personal loans.

As far as innovation goes, Discovery seems to have the edge on its competition. The company has grown its life insurance and healthcare businesses on the foundation of a very successful Discovery Vitality rewards programme. Expanding the group's facilities to offer the Discovery Card was an easy and logical next step.

It seems that Sanlam and Metropolitan have even grander plans. Their most recent products include transactional debit cards linked to customer accounts. 

Sanlam Liquid account offers superior returns

Sanlam offers a product known as Sanlam Liquid. The Sanlam Liquid account offers clients the benefit of easy access to funds while providing investors with superior returns via money market interest rates.

Clients gain access to their invested funds by way of a VISA Electron debit card. The card is issued and administered by Rennies Bank. Clients also have access to an Internet site for full transactions such as transfers and online payments. Fees on the account are reasonable - though the account is not likely to offer all the convenience of a conventional 'big four' bank account. Fees look reasonable, but will vary based on the size, type and frequency of transactions.

Funds deposited in Sanlam Liquid accounts remain fully invested in the Sanlam Money Market Fund which is regulated by the Association of Collective Investments. There are strict mechanisms in place to ensure that funds are invested safely in underlying money market assets.

Metropolitan's offering restricted to Metropolitan Health clients

Sanlam's offering follows a Metropolitan card offering which is currently available to Metropolitan Health OpenPlan members. The card is also a VISA debit card, specifically designed for use as a savings mechanism for members medical requirements. The card, known as the Metropolitan 'GoalPlus' GoalCard is issued by Mercantile Bank Limited.

Savings are encouraged with a promise of a 5% interest rate. Member's also have access to pre-approved loans of up to R20, 000 to cover unforeseen medical expenses. It would  not take a great deal of effort to expand this service to include more clients and transactions in the future.

Is there a new bank on the horizon?

Sanlam's new Liquid account is available to both corporate and individual clients. The transactional capabilities afforded users by way of the debit card and internet site combined with the extremely competitive interest rate should attract a number of customers in coming months.

There have been plenty of rumblings in the insurance world about the impact of banc assurance and other direct insurance on profit margins. Are these cards likely to be the first in a series of actions by insurers intent on winning back some of the lost ground? Could we be witnessing the beginnings of a new bank?

Editor's thoughts:
Sanlam has greatly diversified its product offering in recent years. The company already offers home loans and personal loans. Do you think that Sanlam (or any other insurer) will ever be able to provide an account to rival the offerings of our conventional banks? Send your comments to [email protected].