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Openly curious That’s Westpac’s attitude to technology that’s challenging the very premise of banking. Michael Correa, general manager for Asia Pacific, and Di Challenor, general manager for global transaction services, share their thoughts Founded in 1817, Westpac Banking Corporation – or Westpac, as it is more commonly known – prides itself on having served Australians for more than 200 years. Now, the pioneering bank is focussing on fintechs in a bid to define its role for 200 more years to come. Westpac is one of Australia’s ‘big four’ banks. It is also one of the largest financial institutions in New Zealand and is looking to expand its presence in Asia Pacific. But to successfully do that, Westpac understands it needs to evolve its services. And it believes that’s best achieved by getting involved in the fintech ecosystem. According to Michael Correa, Westpac’s general manager for Asia Pacific, banking will look increasingly different as we see financial services being embedded into consumers’ digital experiences. Customers are more and more looking to connect with their bank through a smartphone instead of a local branch, while millennials often don’t want to talk to anyone at all. So, what will the banks’ role be, especially in the hotly contested area of payments? Australia is leading the way in contactless payments, which are the preferred transaction method for 90 per cent of purchases, according to Westpac research. But it is still in the early phases of rolling out its version of the UK’s Faster Payments Service – Australia’s New Payments Platform (NPP) – while the implementation of Open Banking is only due to start later this year. Regulation and Industry are both driving innovation in Australia – NPP and Open Banking are the result of government initiatives. Asia, on the other hand, being made up of a multitude of countries and cultures, is an impatiently dynamic market, which is leapfrogging legacy infrastructure, through millions
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of consumers who own a mobile phone. Here, innovation is driven by services such as Alipay, which recently announced it has 230 million active daily users. “It’s slightly ironic that you’re seeing the Asian markets innovate much more easily, and embracing technology compared to the more developed nations,” says Di Challenor, general manager for global transaction services in Westpac Institutional Banking. But, not to be outdone, in November, Westpac launched an Asian innovation hub called co.lab in Singapore, to serve as a springboard for some of Australia’s 750 or so fintech firms who want to zero in xon Asia’s fast-evolving markets. The bank uses the 8,000 sq ft lab to incubate fintechs, supporting them with business development, contacts and even direct
You could go from a situation where an economy may not have a broad-base banking network, to everybody gets to have a digital wallet because they have a mobile phone investment, not to mention the valuable association with the Westpac brand. In return, the bank benefits from gaining deeper insight into technologies and business models that may drive new customer experiences. “There’s no doubt working with fintechs is critical in Asia, the way that technology is evolving so fast here,” says Correa. He cites the examples of India, where digital wallets such as Paytm are becoming ubiquitous, and China, where payments are becoming part of
what he calls a wider ‘lifestyle system’ with services such as WeChat. “Apply that to Indonesia or Vietnam, where we see very large demographics and what’s going to happen next could be a leapfrog of technology,” says Correa. According to the PwC Global Consumer Insights Survey 2019, Vietnam's mobile payment usage growth alone increased from 37 per cent to 61 per cent, up by 24 percentage points over the last year. “You could go from a situation where an economy may not have a broad base banking network, to all of a sudden everybody can get a digital wallet because they’ve got a mobile phone.” This is why banks and traditional financial institutions, such as Westpac, need to remain ‘openly curious’ about technological innovation, he says. At home, the bank has already made strategic investments in fintech companies, such as Assembly Payments, Uno and Zip. And its $150million venture capital fund, Reinventure, champions firms that have the drive to disrupt the fintech industry in Asia-Pacific and beyond. Companies it has invested in so far include peer-to-peer lending platform SocietyOne and property investment start-up BrickX. Looking to the future, when traditional banking systems may no longer be what customers want or require, Westpac needs to decide whether it’s part of the payment system, merchant system or regulatory oversight, says Correa. “I don’t think you can rule out anything in today’s market,” he adds. It is already supporting and enhancing what some of the fintechs are doing, especially in the payments space. “I’ve been in payments for 20 years, and right now we’re seeing the convergence of the fintech world, real-time payments, and traditional banking,” says Challenor. “We’ve spent the last couple of years www.fintech.finance