Afterpay exec joins NAB

Australia’s big four banks are playing catch up to the likes of Afterpay, one executive says.

Anthony Eisen and Nick Molnar from technology company Afterpay.

Afterpay’s chief technology officer Jon Donoghue has left the company and joined NAB, as the banks move to catchup to Australia’s ‘‘buy now, pay later’’ market darlings.

Mr Donoghue served at Afterpay for three years and previously worked at UBS for two decades, where he served as its chief information officer for Australia and New Zealand.

His title at NAB is chief information officer, UBank and Enabling Functions, and sits within NAB’s technology and enterprise operations division. It comes as the banks scramble to hold on to lucrative millennial customers, who have been won over by the likes of Afterpay and Zip and their tech-driven offerings, sending their share prices rocketing.

“Jon joining our team is another step forward in our transformation to creating a simpler and faster bank, to deliver better experiences for our UBank customers,” NAB group executive for technology and enterprise operations Patrick Wright said.

“The combination of Jon steering the technology for UBank and Philippa Watson leading the business will set the digital bank up for success to deliver great things for our customers into the future’’

Mr Donoghue said: “I’m excited to be joining NAB as it continues its technology transformation to providing a simple, secure and personalised banking experience for customers.” .

An Afterpay spokeswoman said: “Jon was a valued member of the Afterpay team, and made a significant contribution to our business. We wish Jon all the best in his new role.”

Fellow buy now, pay later provider Flexigroup last week poached NAB executive Jason Murray to be its CFO.

Analysts at Goldman Sachs meanwhile improved their Afterpay price target to $70.15, but gave the company‘s shares a neutral rating. “A consistent theme across retailers with online channels and payment platforms during the COVID-19 period has been how strong online commerce has been while physical retail has been largely shut down,” Goldmans analyst Ashwini Chandra wrote.

He fourth quarter trading update was “materially ahead of our forecasts”.

He said Afterpay’s recent $650m institutional capital raising (which was co-underwritten by the same brokerage) “positions it to support current momentum and potential new market opportunities”.

“This shift to e-commerce has been stronger than we anticipated, acknowledging that the aggregate level of consumer spending has been strongly supported by fiscal stimulus in APT’s key geographies.

“Another key trend benefiting Afterpay is that the use of cash is likely to continue to decline, and this decline may in fact accelerate as a result of COVID-19.”

Afterpay’s shares closed down 0.8 per cent to $71.74.

The Australian reported at the weekend that influential fund manager John Pearce warned of “bubble elements” forming in the emerging fintech sector, in reference to Afterpay’s recent run on the ASX to an $18bn valuation. “It has about eight million customers, and that’s pretty impressive, ­because it’s really only been the last few years that it’s taken off. But Afterpay loses about $50m a year at the moment,’’ Mr Pearce said.

‘‘So, $18bn for a company that loses money. You’re paying a very high price for that growth,” said Mr Pearce who oversees UniSuper’s $85bn investment portfolio.

Mr Pearce noted Afterpay’s market value was equivalent to that of Bendigo, Bank of Queensland and Suncorp combined and together these companies delivered a profit of $1.1bn.

Afterpay’s shares closed down 0.8 per cent to $71.74.