Westpac has signed on Afterpay as the debut user of its new bank-as-a-service platform which is cloud-based. Afterpay will use this platform to provide its Australian customers with savings accounts and cash flow tools. This will allow the company to understand its customers’ savings and help them avoid debt traps.
Westpac Partners with Afterpay as first digital ‘bank-as-a-service’ platform
Afterpay, the bank-as-a-service platform has its foundations in 10x Future Technologies. The latter is a UK-based startup that Westpac partnered up with in late 2019. At the time, a representative for Westpac stated that the bank-as-a-service enabled businesses without banking licences to offer banking services to customers from a licenced bank digitally via APIs. According to a financial filing by Westpac, Afterpay will become the first platform to carry out the buy now pay later (BNPL) operations. The partnership will facilitate Afterpay to offer Westpac transaction and saving accounts as well as many other cash flow management tools to nearly 3.3 million Australians customers in the 2021 Q2. Peter King, the CEO of Westpac said that the company looks forward to working with Afterpay to deliver new services and products.
Westpac’s Fintech Partnerships Open Opportunities in Digitized World
The announcement of Westpac’s investment in the digital banking platform Afterpay was made during its full-year results in November 2019. Brian Hartze, the former CEO of Westpac claimed that the new platform would complement the company’s existing banking business. He said that the idea was to initially operate a bank-as-a-service model and that new digital products and services would be brought to market through fintech and institutional partners. Hartze believed that the partnership would allow Westpac to reach a new group of clients and create value for partners by enhancing their customers’ service offerings.
Back then Hartzer felt that Westpac’s range of fintech partnerships would open up many new opportunities in a world that was becoming increasingly digitised. The initiative between Westpac and Afterpay would build on the significant investment in modernising platforms. This would include both the Customer Service Hub as well as Panorama. This would mean they had the right systems to address changing customer needs in the present and the future.
Westpac and Afterpay’s Run-Ins with Austrac
Earlier last week, the Australian Transaction Reports and Analysis Centre (Austrac) concluded its anti-money laundering investigation into Afterpay. The fintech was given the all-clear. In June 2019, it had appointed an external auditor to investigate Afterpay’s Australian operations. This specifically included an examination of Afterpay’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). Austrac later released a report stating that in response to the findings and recommendations identified in the external audit report, it had decided not to undertake further regulatory action.
On the other hand, Westpac reached an agreement with Austrac to settle its anti-money laundering and counter-terrorism financing allegations. These allegations had been raised by the watchdog in November 2019. The bank will have to pay a whopping AU$1.3 billion for breaching the AML/CTF Act over a staggering 23 million times. Westpac has admitted to all the regulatory reaches, which include its failure to report more than AU$11 billion in international funds transfers.