Institutional customers seek innovative solutions
Commercial clients increasingly seek out technology-driven solutions, so partnerships between financial institutions and non-traditional providers may become commonplace
12 Apr 2019 | Tom King
Di Challenor
Di Challenor

The role fintech plays in the banking sphere is set to multiply over the ensuing years, and businesses seeking solutions to improve efficiency need partners who can add value and seamlessly integrate new technology.     

One of the most influential women in the payments sector, Di Challenor, is the general manager, transaction services, at Australian bank Westpac. She spoke with The Asset during the recent Money20/20 event in Singapore on her role at Westpac and shared her views on how fintech innovations are influencing the institutional banking business.  

Over the past two years we have witnessed some high-profile retrenching out of Asia by Australian banks. What is Westpac’s Asian strategy now?

We have had a very targeted strategy in Asia for some time, focusing on corporate and institutional banking with particular expertise in natural resources, agribusiness and increasingly, e-commerce. 

As a 202-year old company, we also have a vision to be a really great service business for our clients, and to enable our clients to make the most of their digital capability to enable their business to prosper and operate efficiently.

Our clients are looking for new opportunities to engage with their customers, to do business better and expand into new areas. Co.lab plays a role in that, as does Reinventure, which has a mandate to invest in Asian as well as Australian fintechs.

To give you one example of how that partnership approach works in practice, one of our portfolio companies, Data Republic, is at the leading edge of how the world collaborates with data, securely and appropriately from a privacy perspective. 

That is of great interest to our clients in Singapore, where making the best use of data is a part of the drive for a so-called Smart Nation economy, and so we’re able to sit down with Data Republic and our Singapore clients and talk about ways that they can collaborate.  

Do you see new areas of collaboration between Asia and Australia in your industry that are currently not on the radar?

There is no doubt in my mind that there will be new areas of collaboration, some that we’re exploring already and some that we haven’t thought of yet. 

Things are moving so quickly that it’s vital to have that engagement and dialogue with fintechs, with peers and with clients, be they corporate or government. We are seeing a lot of activity in data, AI and payments at the moment.

Westpac launched the innovation lab (Co.lab) in Singapore last year. How has the operation performed to date?

Our Singapore Co.lab is one of five Westpac innovation labs and is the only Co.lab in Asia. It’s the only one of its kind for an Australian bank in Asia. 

The idea behind the Singapore Co.lab is that it acts as a hub and a launch pad for Australian fintechs into the region, as well as a bridge for Asian fintechs who want to expand into the Australian market. 

It’s a natural extension of our approach to innovation which is to innovate ourselves internally in some areas, but also to partner with fintechs and other financial services providers where it is mutually beneficial. 

That might include investing through our venture capital fund Reinventure, which is a A$150 million (US$107.4 million) fund, or directly from our own balance sheet. So far, we’ve seen real momentum with the Singapore Co.lab, and it’s being used by a number of our Reinventure partners as they expand into the region.  

In addition, during Money 20/20 Asia, for example, we were able to host 18 Australian fintechs, alongside Austrade and Fintech Australia, to pitch their ideas to investors. We also have a number of POCs (Proof of Concepts) in the pipeline and it’s been a great platform for deeper engagement with clients and fintech partners.

Retail banking has been a fertile hinterland for fintech disruption, so what are the next major disruptions coming to global transaction services?

Fintech disruption is a really interesting space and is increasingly being adopted by institutional customers. 

We are already seeing customers asking for innovative solutions to their needs and it is now imperative for new products to have a strong digital offering encompassing real-time processing, 24/7 access to information and the ability to use virtual products such as single use cards and digital wallets.

To support this, more and more banks are executing on Open API strategies to solve customer pain points through enhanced functionality across their value chains. 

Technology is also enabling the emergence of end-to-end integrated solutions that are easy to onboard customers and bring together a bundle of interlinked applications to manage, for example, orders, inventory and back-office processes such as payroll. 

In addition, Merchant platforms now need to cater for a variety of emerging payment channels – both current and future - as well as traditional payment methods. 

The key to future success is effective partnership between established financial institutions and non-traditional providers to seamlessly work together in a transaction banking ecosystem.

You are a non-executive director of fintech firm Zip Co. Is the experience beneficial to you for your day-to-day banking work?

Firstly, the association with Zip Co for Westpac has been extremely positive. A little under two years ago Westpac invested directly in Zip Co, which is an ASX-listed company focused on the buy-now pay-later category, and there was a great deal of discussion around that investment. 

After all, the idea is conceptually similar to the credit cards and consumer credit we offer existing customers. But Zip Co has done a great job in signing up something like a million - often millennial - customers in a very short space of time. So, from an investment perspective, that has been very beneficial for Westpac. 

To be on the board of a fintech firm like Zip Co, which is having an impact on the market and that is very creative and dynamic, has allowed me to get closer to the customer and the customer experience.