The much-anticipated money app from buy-now-pay-later giant Afterpay has been switched on, the first product to leverage Westpac’s banking as a service model and the “most modern banking architecture in Australia”, according to Jason Yetton.
Speaking to Westpac Wire, the chief executive of the bank’s specialist businesses says the partnership, which enables Afterpay to offer its Australian customers access to spending and savings bank accounts underpinned by Westpac, provided “a really innovative way to digitally bank”.
Listen to the full interview with Jason Yetton
Yetton says the banking as a service model, a nascent phenomenon that's beginning to take off in overseas markets like the US and Europe, recognises that banking is increasingly becoming embedded in the platforms, apps and workflows of non-bank businesses, particularly those with younger customers like Afterpay.
“Partners recognise that there’s a huge cost, complexity and effort to set up banking services – indeed we've seen the failure of some so-called neobanks – because it's a big technology investment and you need the strength of balance sheet capital and, importantly, a lot of banking expertise to be able to do it,” Yetton says.
“And …for Westpac, partnerships like these allow us to acquire new customers in different demographics where generally the Westpac Group is underweight … potentially very quickly and efficiently.”
Yetton says the underlying banking technology – a cloud-native banking platform built in partnership with UK-based financial technology provider 10x and integrating more than 30 different technology services – provides a path for Westpac to reduce technology costs, and the flexibility to adapt to deliver “best of breed solutions”.
“Being cloud-based, we've got a ‘plug and play’ model,” Yetton says.
“APIs are powering the ecosystem with cloud-based micro services underneath, and that allows us to be future ready, to be able to benefit from the constant innovation that either our partners in technology or ourselves will bring to market in the future.”
Yetton says he expects Westpac’s second banking as a service partner, peer-to-peer lender SocietyOne, to bring its banking product to market “early next year”, and other partnerships will be announced soon. He also says while transactions and saving accounts were the first products in Westpac’s banking as a service offering, the team is already eyeing expansion, beginning with mortgages.
“The next cab off the rank will be to reimagine a home buying journey and make that really easy, digital, fast, simple and competitive – and we want to do that in 2022,” he says.