Banks tackle fintech challengers as they struggle to be preferable to a dentist visit
According to the Millennial Disruption Index, 71 per cent of young people would rather go to the dentist than listen to what their bank is saying, and new research from Viacom’s research arm, Scratch, finds a third of Millennials expect to be bank-free in the near future.
Meanwhile 75 per cent say they would prefer financial services from start-ups and tech companies such as Apple or Google.
US fintech phenomenon, SoFi, has been at the forefront of new customer acquisition and retention strategies, including career counselling and using data analytics to match-make their customers in “Singles Nights” cocktail functions.
The Big Four Australian banks know the challenges that lie ahead and have been busy investing billions in technology, change management and partnerships to maintain relevance.
Each has established significant innovation labs in their head offices to design new products and services. ANZ co-invested in its Sydney lab with IBM as part of a broader $450 million deal and has an offshore lab in Singapore. CBA also has labs in Hong Kong and London.
The banks are investing real money into fintech start-ups with the strategic intention of gaining access to new markets/customers or third-horizon innovative products/services. Many of these investments are not into fintech pure plays but into companies that have a strong niche in a vertical the bank is eager to access, such as health, real estate and hospitality.
Westpac’s all in
The most structured approach is Westpac’s $100 million investment in the Reinventure fund.
Reinventure offers, not just investment dollars, but a strategic relationship with Westpac to help scale the business.
Reinventure has 16 investments, including Society One & Valiant (lending), Hyper Anna & Zetaris (data), OpenAgent (property), Flare (HR), Fillr (facilitation), Auror (crime prevention), Assembly (payments), Doshii & HeyYou (hospitality), InDebted (debt recovery), Coinbase (cryptocurrency) & Nabo (social media).
In September 2017, Westpac, in partnership with fintech hub Stone & Chalk, launched FUELD, a data accelerator taking eight start-ups per intake.
Westpac has also made direct investments outside the Reinventure platform, including taking more than 90 per cent of Uno Home Loans to collaborate in online mortgages; 16 per cent of Australian cyber security operator, Quintessence Labs; 10 per cent of digital wallet provider Inloop; and an unspecified percentage of medical financial management start-up, Surgical Partners.
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Source: Banks tackle fintech challengers as they struggle to be preferable to a dentist visit | afr.com
