New chief executive of Westpac Banking as a Service Damien MacRae has plans for the nascent business to keep Westpac ahead of “embedded banking” trends.
“Banking is increasingly becoming embedded in platforms and apps of non-bank businesses,” said Mr MacRae, whose appointment to the newly created role was announced today by Westpac’s specialist business chief Jason Yetton.
“Those non-bank businesses recognise that banking is an incredibly capital and regulatory intensive business, which is something they don’t wish to explore – but it's core to Westpac and that’s what we’re leveraging through banking as a service,” he said.
“I’m excited by the opportunity to keep Westpac at the front of this trend.”
Mr MacRae, who takes the reins from April 1, said there was good momentum in the two-year old banking as a service business, which leverages a cloud-native banking platform built from the ground up in partnership with UK-based financial technology provider 10x and integrating more than 30 different technology services.
Among the early partners to the service, Afterpay has been the first to switch on a product, in November launching its spending and savings accounts, underpinned by Westpac. Mr MacRae said early take up among Afterpay’s customers was promising, with account openings expected to grow as marketing activity takes off.
“The exciting thing about Afterpay is they have more than 3.3 million Australian customers, so there's an opportunity for us to interact with 3.3 million people that may not already have a relationship with Westpac,” he said.
“Many of them fall into that millennial target market which is an important audience for us.”
Mr Macrae said there was also “good movement” on work to bring other partners’ products to market “within months”, including for digital lender SocietyOne, as well as “strong interest” from other potential partners.
“We're having conversations with a range of businesses about the platform’s capabilities and how it can help them – companies from a cross section of industries, with large customer bases, predominantly within that millennial demographic market.”
In addition to transaction bank accounts, Mr MacRae said the team was on track to have its fully digital mortgage proposition up later this year, along with other products and services.
“The broader banking as a service strategy is customer driven and will reflect customer choice and we'll continue to work with partners – whether that be Afterpay, SocietyOne or any new partners – around what banking products their customers are interested in,” he said.
Mr MacRae has had a long association with Westpac, having worked with the bank previously for 12 years from 2003 in a number of senior roles across mortgages, retail and SME and premium banking. He re-joined in June 2021, after a six-year stint with ASX listed InvoCare and data company Experian. He’ll retain his current role as managing director of Westpac’s Pacific Bank and Specialist Finance.
Mr Yetton said Mr MacRae’s appointment comes during an “exciting new phase” for Westpac Banking as a Service, which he’s described as the “most modern banking architecture in Australia” with the ability to reduce both technology and customer acquisition costs.
“Fintech innovation is changing banking in important ways and banking as a service is part of our long-term strategy to support this trend and better respond to changing customer needs,” Mr Yetton said.
“(Damien) was an early advocate for online and mobile banking in his previous leadership roles in Group and has extensive experience with data and analytics … I know he will take this forward thinking into the next evolution of digital banking.”
While the business as a service model is still in its early phases in Australia, it’s been adopted more broadly in overseas markets including the UK, Europe and the US, provided by the likes of Goldman Sachs, JP Morgan and Standard Chartered along with smaller players with banking licences, such as Starling.
Mr MacRae’s appointment shores up Westpac’s growing banking as a service team, which has seen other key appointments in the past three months, including Christopher Gale as chief commercial officer, Nicole Druce as head of technology and Chris Baker as head of product. Mr MacRae said he intends to continue to run it as a stand-alone business to ensure focus on “innovation and creativity”.