NAB will enable business customers to pay via Xero
(30 January 2018 – Australia) National Australia Bank (NAB) will be forgoing some of its control over business payments to cloud accounting platform, Xero.
NAB and Xero are on a national roadshow this week to brief Xero customers on the innovation, ahead of a closed beta trial in February and roll-out to the broader market mid-year.
Xero's managing director in Australia, Trent Innes, told the Australian Financial Review hoped other banks would follow NAB.
"I think we will look back one day and say 'I can't believe we used to take payment information from our desktop and import it manually into banking software'," Innes said.
"Ultimately it comes down to customers being able to work in their channel of choice, and we should be removing the friction to make it as easy as possible to go about their daily business."
Jonathan Davey, executive general manager of digital and innovation at NAB, said, "If the NAB customer is operating in the Xero ecosystem and we can provide value to that customer by making it easier for them, I can't see why you wouldn't do that.
"There are schools of thought that say there is a risk of NAB becoming a utility in that case, but I think what we're trying to do is deepen the relationships that we have, and if that means the customer, in some cases, will perform their banking through third-party channels, then that's fine."
Conversely, NAB's internet banking service will be enhanced by the partnership.
The bank, which has the largest primary transaction banking market share, according to East & Partners, will receive access to customer working capital levels held by Xero.
"We are taking some of the data that currently only exists in Xero and providing a dashboard in our internet banking channel," Davey said.
"Customers will use their platform of choice. That might not necessarily be one platform. It could be their banking platform, their accounting software, or another third-party platform. It will be what the customer chooses it to be, and we will have to make sure we can provide services where our customers want to operate."
"What we are trying to do here is say let's step beyond what might be the regulations and actually understand how we deliver real customer value. If that goes beyond what the regulator says, then that's great," Davey said.
East’s SME Transaction Banking Markets Program has also found that bank is rapidly losing ground to Big Four rival, CBA. Should each providers’ current year-on-year primary market share trends continue, CBA could overtake NAB as the largest primary provider to small businesses in Australia by 2019.
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