(04 November 2020 – Australia) Westpac CEO Peter King has backed up the group’s move to ‘white label’ Afterpay’s transaction banking operations, asserting “when we look at banking and how it is provided, we think it is fundamentally changing”.
Afterpay is the first Bank-as-a-Service (BaaS) customer of Westpac's with Mr King deflecting concerns raised about potential risks of the 10X platform while acknowledging the need to respond to emerging strategic disruptive trends. Other banks are seeking to provide infrastructure to Fintechs and this is a market “Westpac wants to be in” Mr King stated. NAB is the leading provider of warehouse funding to Fintechs while CBA continues to develop concepts in-house.
East & Partners upcoming Global Insight Report delves deeper into the changing nature of relationship banking as result of COVID-19 forcing customer behavioural changes, altering engagement permanently.
“There are still going to be people who deal directly with the bank, and there will be others who come through different channels” Mr King stated.
“Afterpay has taken a lot of share in the payments space, clearly credit cards are under pressure for various reasons. Why provide a competitor with 3.6 million customers access to your transaction and saving account capability?” Morgan Stanley Analyst Richard Wiles commented.
“There is a long tail of infrequent users, with the bottom 70 percent of Australian and New Zealand customers transacting five times in the past 12 months. But the top 10 per cent customers transact 54 times a year. We also highlight that the most frequently transacting customers are unlikely to have a balance of zero, implying their use of Afterpay as a revolving line of credit rather than a budgeting tool” UBS Analyst Tom Beadle said.