Westpac and SocietyOne to expand its new digital banking-as-a-service platform. The platform, considered the first of its kind in Australia, uses cloud-native technology to support digital banking needs. Westpac first announced an investment in the digital banking platform as part of its full year results. Westpac welcomed fintech Afterpay as the first partner on its digital banking platform. Afterpay is expected to provide Westpac transaction and savings accounts and other cashflow management tools to its 3.3 million customers in Australia in Q2 2021. Latest partnership with SocietyOne will enable the bank to reach new customers through a low-cost operating and distribution model. It will also help the bank grow deposit balances and, over time, expand its offer to lending and data services, he added. Westpac’s digital banking services will be available to SocietyOne customers in the second half of 2021. Westpac’s announcement highlights efforts by Australia’s incumbent banks to step up digitalization efforts to defend their over 70 percent market share against neobanks/digital banks.
The arrival of neobanks has led to traditional banks accelerating their digital offerings. This is expected to create more competition for neobanks. Neobanks are completely digital and almost all of them are 100 percent app-based with no bank branches, allowing them to operate under a lower cost model. Volt Bank was the first neobank in Australia to be granted a restricted ADI licence in May 2018. In January last year, the neobank was granted a full banking licence, making it the first new retail bank in Australia in almost 20 years. Up Bank was also among the first Australian neobanks to open to the public, having launched in October 2018. This was followed by the launch of 86 400 in September 2019, though it is set to be folded into NAB (National Australia Bank)’s digital offering known as UBank.