Westpac targeting more banking service partnerships, after deals with SocietyOne, Afterpay

Westpac is targeting partnerships in 2021 via its banking as a service platform, after securing SocietyOne and Afterpay.

SocietyOne boss Mark Jones. Source: Supplied

Westpac is targeting a handful of partnerships in 2021 via its banking as a service platform, after securing SocietyOne and Afterpay and highlighting that consumer banking habits are changing.

Westpac announced the tie-up with lender SocietyOne on Tuesday, which will see digital banking services made available to the latter’s customers in the second half of this year. The deal further cements a relationship between the bank and SocietyOne, given Westpac’s venture capital partnership Reinventure has been an investor in the personal and peer-to-peer lender since 2014.

Westpac is stepping up its efforts and has a pipeline of further partnerships. Four months ago, Afterpay announced it was teaming up with Westpac to launch the buy now, pay later provider’s first savings account and cash management product in Australia.

Westpac’s corporate and business development general manager Macgregor Duncan said the bank was accelerating the partnership strategy alongside its efforts to organically grow its customer base.

“We have a remit to strike new partnerships and thereby increase the customer reach for the bank,” he added.

“A handful makes sense. Since we announced the Afterpay partnership late last year we’ve received many inbound inquiries about potential partnerships from both large institutional customers of Westpac and other fintechs … We’re in discussions at the moment and we would expect to make additional announcements.”

SocietyOne — which was founded in 2012 — is also a candidate to list on the ASX this year, after growth returned to pre-pandemic levels and it topped a milestone of having originated more than $1bn in loans.

Besides Reinventure, it is backed by shareholders including Seven West Media, Consolidated Press Holdings, G&C Mutual Bank and News Corp, publisher of The Australian.

SocietyOne chief executive Mark Jones said joining with Westpac would help the lender add more products and services to its business, drawing on the bank’s scale and licence.

“For us it gives us a chance to give our customers, help our customers, in more situations and build a longer relationship.”

On the vexed question of who will own the customer, given Westpac is providing white-labelled products, Mr Jones said:

“The customer thinks they’re a customer of SocietyOne but at the end of the day the legal customer responsibility actually resides with Westpac.”

Westpac is using its investment in Antony Jenkins’s 10x Future Technologies and the roll out of the platform to operate a “bank-as-service” model.

Mr Duncan highlighted that banking was changing and evolving into an “open architecture ecosystem”, where participants didn’t have to manufacture and distribute all their products and services.

“What we are beginning to see is the disaggregation of that into a much more open model,” he said.

“Australians are increasingly looking for new and different ways to do their banking and they want to integrate it alongside other financial products, or other experiences or ways in which they manage their finances.”

Earlier this month, Commonwealth Bank CEO Matt Comyn said it was important he continued to invest in opportunities and new products. “Many people see banking as a commoditised product; we take a different view.”

Mr Duncan said he also disagreed with those who have labelled the sector commoditised, saying it was a “false analogy”.

He said while Westpac was pursuing its banking as a service model it was also still as committed to its direct channels.