The bank's CIO has used the term 'frenemies' to describe the relationship Westpac has with the fintech community down under.
It was only four years ago that finance technology startups were pegged as disrupting the banking space by "eating their lunch". Now that the scaremongering has subsided, Westpac CIO Dave Curran has said that fintechs and banks are sitting down to lunch together.
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"The concept of frenemies becomes a language that people are talking about ... the banks know they need to work with the fintechs because that's how we provide better services to our customers. Similarly the fintechs want to work with the banks because we have that base core logic and data that's important in terms of how we run financial services," Curran told the Oracle Cloud World in Sydney last week.
To Curran, it's far more beneficial for fintechs and banks to work together, instead of in competition, as both have something to offer the other.
"The biggest challenge for banks is banks grew up selling products and then opening branches, call centres, internet banking, etc — banks no longer sell products, banks provide services, most things in most industries are now services," he continued.
"How do you transform something that the entire architecture is based around product and channel, to something that's based around services?"
Infrastructure is not something Curran sees as core to a bank moving forward, and questioned why banks still own their infrastructure — and in particular datacentres.
"We need to leverage what's out there and leverage the capabilities of others, so IaaS and PaaS becomes important — but what becomes more important is how do you transform that business logic around the customer and present that to customers in a way that services customers in new and innovative ways," the CIO continued.
"Building new websites, building new mobile capabilities is actually not that hard; the harder bit is how do you actually do that on top of the business logic and the data?"
According to Curran, the fintechs can do things Westpac can't and they can do it faster and more ably in their domain.
"We can then work with them to provide a better service for customers," he added.
"Fintechs don't have the business logic we have, they don't have the capability to handle the regulation, to handle the compliance, to handle the large scale of data and business logic we do. That coming together is a massive change in service delivery for customers, as opposed to one is going to take over the other or vice versa, which was the conversation of only five years ago."
Australia is moving to legislate a new Consumer Data Right, which will allow individuals to "own" their data by granting them open access to their banking, energy, phone, and internet transactions, as well as the right to control who can have it and who can use it.
Getting Westpac to a place where it can open up that service while still running the bank is "actually the biggest challenge", Curran said.
"The other big one for banks is how you do that securely — technology would be easy in the 21st century if it wasn't for cybersecurity," he continued.
"Open banking is a really large and current topic ... at Westpac we're huge supporters of the concept of open data and open banking as that actually enables the community to grow and enables the industry and the economy to grow. But similarly, being the CIO, my own concern on that is let's be careful around a cyber environment — if you lose that, getting it back is really difficult."
Building a slide deck, pitch, or presentation? Here are the big takeaways:
- One of Australia's largest banks believes it's more beneficial to work with fintechs than against them, as the practice offers a mutual benefit.
- Westpac is focusing on reshaping the way a bank operates, moving from selling products to providing services.
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