Open banking is officially rolling out in Australia, with the majors expected to start producing data for a variety of products, but how else have traditional banks used the technology? Traditional banks have started to increase their financing in start-ups in order to take advantage of new innovations and technologies.
The challenge has been to compete with smaller, more nimble neobanks that can provide personalized, comprehensive solutions to customers faster and at lower cost.
Traditional banks are weighed down by existing bureaucratic systems and processes, and for years they have built products and then tried to convince their customers why it was good for them.
This process is evolving as banks begin to listen to customer needs and partner with fintechs to bring better products and solutions to market.
Each of the big four goes about this in slightly different ways, but all generally aim for the same goal: greater innovation.
ANZ
ANZ has integrated the importance of technology and innovation into its strategic priorities with the aim of making banking easier for its approximately 3.7 million digital customers. Its priorities now indicate that it wants to “build a superior daily experience so that our employees and customers can compete in the digital age”.
The bank’s aim is to put digital innovation at the heart of its strategy, with the process beginning in 2018 when it introduced a new app and created a unified mobile banking app by joining Grow and goMoney into a single app.
The major bank now has almost 150 digital branches across Australia, which are leveraging technology to improve service. One way to do this is to reduce personal loan application times from one hour to less than 10 minutes. Digital transactions accounted for 86 percent of its total transactions by value last year and 25 percent of retail transactions.
National Bank of Australia
NAB launched its own digital bank UBank in 2008, which aims to become Australia’s first digital bank. In 2018, UBank increased its number of customers by 17%, and in the second half of the year its home loans grew at a rate four times higher than system rates. UBank recently launched its AI assistant, Mia, which specifically helps customers with their home loan application queries.
For its SME customers, NAB has formed a strategic partnership with Xero to enable customers to faster access funds and make payments directly through their platforms rather than through the NAB web portal.
The largest investment in technology comes from NAB Ventures, which invests in companies and technologies that address core themes for NAB, such as supporting retail customers in a cashless world. Basiq is one such investment, which is an aggregation platform for acquiring financial data. This was an open banking investment as Basiq enables fintech companies to acquire permissioned financial data and develop solutions for their clients. The total fund is worth $108 million and includes 10 investments covering payments, lending, AI, data and new business models.
NAB also recently pledged $2 billion to the tech industry to help companies grow and grow their businesses.
Commonwealth Bank
One of CBA’s biggest promotions is that it has Australia’s most downloaded banking app, with 6.7 million digital customers and more than five million logins per day. The app, however, is expected to be relaunched to better focus on personalized experiences, including spending comparisons, benefit entitlements and credit card payment warnings.
CBA has a history of technology, launching NetBank in 1997, which became the first to conduct a bond-only transaction using blockchain in 2018. For its corporate clients, it has deployed BizExpress, which allows CBA account holders to obtain approval for unsecured transactions. loans under $250,000 in less than 12 minutes. Secured loans of up to $1 million are now also available on the same day, through the service.
It also worked with NAB and Westpac to launch and expand the Beem It payments system from retail customers to micro and small businesses. Unlike NAB and Westpac, CBA does not have an explicit venture capital fund, but rather invests in ecosystems such as home buying, where it has value chain partners to enhance its offerings.
CBA also has an innovation lab in Sydney and London to help clients create technology solutions to business problems.
Westpac
Westpac recently revealed the four pillars of its digital pay, which aim to provide customers with a painless digital experience and give them greater control. It is currently in the process of replacing aging infrastructure systems and streamlining customer interactions.
Westpac has one of the largest venture capital funds called Reinventure. The fund has $150 million in committed funds for investments, which covers investments in areas such as new business models, new technologies, insights, data and AI. One such investment is Akin, which aims to build human-like AI that can autonomously solve problems and build relationships with humans.
Westpac also partners with larger technology companies from its own balance sheet to create strategic partnerships. One such partnership was with Valiant, which matches small businesses with business loans best suited to their needs by screening banks and lenders through its brokerage platform. Westpac also launched Co.Lab, a space for Westpac and start-ups to meet and work on joint proposals.
Read Part 2: Who are these upcoming neobanks for the majors?
