Afterpay, Westpac in digital banking partnership

The pair’s partnership will enable the fintech darling to offer banking services through Westpac’s digital platform.

Afterpay’s Anthony Eisen and Nick Molnar.

Westpac has announced a partnership with Afterpay on its new digital banking platform, in the first major partnership between the ascendant buy now, pay later provider and a big four bank.

In a statement to the ASX on Tuesday, Afterpay said the collaboration agreement would enable the introduction of Afterpay savings account and cash flow tools for Australian customers from next financial year.

The fintech, which has seen 700 per cent growth in its stock price since March, said the new products would complement Afterpay’s existing business model by “offering additional, customer-centric alternatives to traditional banking products”.

The new savings accounts will initially be able to perform basic banking activities such as the payment of bills, budgeting and cash withdrawals, with new features to be introduced over time.

Afterpay said data gleaned from customers making use of these features will “deliver further insight into how customers prefer to manage their finances, what their savings goals are, and how responsible spending behaviour can be further encouraged and rewarded.”

Afterpay CEO and managing director Anthony Eisen said the partnership represented considerable foresight on the part of Westpac.

“We are excited to leverage the bank-as-a-service platform to provide customers with a different way to manage their finances, without relying on traditional banking services,” he said.

“We applaud Westpac’s foresight in curating this innovative digital platform and welcome their desire to partner with Afterpay to meet the changing needs of a powerful next generation of customers.

“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.”

Afterpay has hailed Westac’s “foresight”. Picture: David Geraghty

Westpac CEO Peter King said the collaboration agreement would help the legacy institution meet the changing needs of its customers.

“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, Afterpay,” he said.

Westpac also owns a 10.67 per cent stake in Afterpay competitor, Zip Co.

“This collaboration reflects our strategy to meet the changing needs of customers and demonstrates our desire to partner with differentiated business models that provide alternative ways for consumers to spend and manage their finances,” Mr King said.

Afterpay also said the company would seek to roll out Westpac’s digital platform capabilities across all of its markets.

The fintech darling currently operates in the US and in the UK, under the Clearpay brand.

“By leveraging the globally-scalable technology and associated banking and regulatory infrastructure, Afterpay can design, build and deliver additional services to customers without diverting from its unique and customer-centric business model, as well as retain ownership of its customer interaction and relationships,” the company said.

“The collaboration also brings efficiency benefits to Afterpay’s existing activities from a risk management and processing cost perspective and has the potential to facilitate new revenue streams over time, without needing to develop traditional banking or credit products.”