Westpac Group has appointed “buy now, pay later” service Afterpay as the first partner on its new digital bank as a service (BaaS) platform.
The partnership has materialised after former Westpac CEO Brian Hartzer flagged the bank’s plans for a “digital future” in its 2019 full-year results, in which he said the bank will be investing in the digital-only banking platform that would complement its existing banking businesses.
“This will initially operate a ‘bank as a service’ model, and we intend to bring new digital products and services to market through fintech and institutional partners,” Mr Hartzer said.
“This will allow Westpac to reach a new group of customers as well as create value for our partners by enhancing the service offering to their own customers.”
Mr Hartzer further stated that as part of the initiative, Westpac expected to make a minority equity investment in UK-based cloud banking technology provider 10x Future Technologies Holdings Ltd.
Through the partnership, Afterpay will provide Westpac transaction and savings accounts and other cash flow management tools to its 3.3 million customers in Australia in the second quarter of 2021.
The major bank said the new BaaS platform uses cloud-native technology from 10x Future Technologies, and allows it to work with companies to offer banking services to customers.
Commenting on the partnership, Afterpay CEO Anthony Eisen said: “We believe Australians deserve greater support and insight to help manage their money.”
“Together with the power of our retail platform, the latest banking technology from 10x, and the support of Westpac, we will begin by offering cash flow management in a simple way.
“Afterpay is in a unique position to extend and deepen the relationship with our customers and help them to manage their money more seamlessly through savings and budgeting tools. For Afterpay, this is clearly just the beginning as we explore this opportunity globally.”
Westpac general manager, corporate and business development, Macgregor Duncan, said: “We have built the platform to allow us to collaborate closely with our partners, and we are excited to work with Afterpay to pioneer services relevant to, and reflective of, its customer base and unique business model.”
Westpac CEO Peter King said the digital banking platform will combine Westpac’s banking experience with the “innovation” of its partners to support customers.
“Fintech innovation is changing banking in important ways, and our new digital banking platform is part of our long-term strategy to support this trend and better respond to changing customer needs,” Mr King said.
“We look forward to working with Afterpay to deliver new products and services.”
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.