Westpac is to make a minority investment in 10x Future Technologies as it preps a new digital bank that will operate a 'bank-as-a-service' model.
The plans were unveiled as the Australian bank posted a disappointing set of full year results, impacted by wider operating costs in the aftermath of the Banking Royal Commission and subsequent customer remediation and regulatory burdens.
Technology costs were also up by $174 million year-on-year as the bank sought to drive productivity improvements and reset its business for the digital era.
“We have delivered innovations to make it easier for customers to do their banking, including our virtual assistant chatbot ‘Red’, which has had almost 1 million interactions with customers and resolved more than 70% of queries without escalation to a banker," says CEO Brian Hartzer. “We have also invested in a range of fintech partnerships that open up opportunities in an increasingly digitised world."
These partnerships will become increasingly important as the bank introduces its banking-as-a-services platform.
“We intend to bring new digital products and services to market through fintech and institutional partners," says Hartzer. "This will allow Westpac to reach a new group of customers as well as create value for our partners by enhancing the service offering to their own customers."
10x, the fintech startup founded by former Barclays boss Antony Jenkins, offers a cloud-based plug-and-play platform to kickstart digital banking operations.
Nationwide Building Society in March took a £15 million stake in the company, with the aim of investing in a technology backbone for its forthcoming business banking service. The cash formed part of a broader Series B funding round for 10x, which suffered a blow to its ambitions last year when CYBG acquired Virgin Money, pulling the plug on a lucrative core banking product deal.
Says Hartzer: “This initiative builds on the significant investment we have made - and will continue to make - in modernising our platforms, including the Customer Service Hub and Panorama. Together this will mean we have the right systems to meet changing customer needs now and in the future."