Afterpay signs up to Westpac banking-as-a-service platform
Westpac has signed buy now pay later (BNPL) firm Afterpay as the first user of its banking-as-a-service (BaaS) platform.
Afterpay can use the platform to offer savings accounts and cash flow services to its Australian customers.
The firm says the new products, launching in 2021, will offer “customer-centric alternatives to traditional banking products”.
10x Future Technologies provides the tech for Westpac’s platform. The two companies joined forces in November 2019 to build the platform.
Westpac said it had been approached by “a range of companies” looking to use the new service.
“We are very pleased to be able to offer our digital bank-as-a-service platform to one of Australia’s most prolific fintech innovations,” says Westpac CEO Peter King.
“This collaboration reflects our strategy to meet the changing needs of customers and demonstrates our desire to partner with differentiated business models.”
Westpac invested more than AUD 800 million ($568m) in 2018 on new digital technology. The bank claims to have moved 100 applications into the cloud, with APIs in production.
The bank is a long-standing user of the Hogan core banking system from US-based firm CSC. It kicked off an upgrade of its systems in 2010 to the CSC’s latest offering, Celeriti.
In June 2018 it shifted its core banking operations into a private cloud operated by IBM.
Afterpay says its new capabilities will help it from a risk management and processing perspective.
BNPL firms have come under fire from consumer groups in Australia. 13 consumer groups joined earlier this year to ask for more concrete legislation on BNPL practices.
“Providing services ethically means that BNPL shouldn’t just finance any purchase, but they should take care to ensure it is an appropriate product to finance,” the group wrote.
Afterpay CEO, Anthony Eisen, says the Westpac deal will help his firm build on its core principle of “encouraging responsible spending and enabling financial wellness.”
He adds: “In deepening our relationship with our customers, we will gather greater insights into how they prefer to manage their finances and better understand their savings goals.
“This will allow us to assist them to budget more effectively and avoid debt traps.”