10 Tech Developments Driving Business Value for Banking Consumers

Last week, ANZ CEO Shayne Elliott spoke at Sibos, Australia’s premier banking and finance event in Sydney. Elliott was positive about the changes the Hayne Royal Commission and technological disruption would deliver to customers, including new business models, new revenue streams and exceptional customer experiences. Here’s how tech developments are driving business value for banking consumers.

The ANZ CEO believes a blend of new technology will characterise future Australian banking products. Some developments to watch are:

1. Open banking

Open banking is a system that provides customers with a network of financial institutions’ data through the use of application programming interfaces (APIs). Open banking aims to return ownership of financial information from banks to consumers. The de-centralised system enables banking customers to securely share their financial data with other financial institutions. Benefits include easily transferring funds and comparing product offerings to create a banking experience that best meets each user’s needs in the most cost-effective way.

For example, borrowers could evaluate credit products from multiple lenders, and switch instantaneously to a better deal. Currently only two per cent of all banking customers switch products, even when there are better offers in the marketplace.

2. Partnership business models

Banks are simplifying their own business models, divesting themselves of high risk customers and investments partnering with other providers to bundle value-added services and products. API software will power this development.

3. Machine learning and AI

The financial advice sector is transforming rapidly. Robo advice services have emerged in the last five years. Digital financial advisers, such as Ignition Direct and Raiz Invest, offer automated online financial and investment advice. Customers set financial goals and select their risk tolerance and a robo adviser uses complex algorithms and mathematical models to calculate an investment strategy.

4. Distributed ledgers

Distributed Ledger Technology (DLT) is underpinned by blockchain technology. It enables institutions to record and track information in a ‘distributed’ rather than ‘centralised’ manner.

Top five DLT benefits:

• Greater transparency. Transaction histories are becoming more transparent through the use of DLT.
• Enhanced security. DLT is more secure than other record-keeping systems.
• Improved traceability.
• Increased efficiency and speed.
• Reduced costs.

5. Apple Pay

Apple Pay is a contact payment technology as well as a feature on the latest iPhones and Apple Watch.

It pulls credit and debit card details along with other sensitive-payment data from the Wallet app, enabling customers to use their iPhone, iPad or Apple Watch as a wallet at store checkouts.

6. New Payments Platform (NPP)

The New Payments Platform (NPP) is open access infrastructure for fast payments in Australia. The NPP was developed via industry collaboration to enable households, businesses and government agencies to make simply addressed payments, with near real-time funds availability to the recipient, on a 24/7 basis.

7. Real-time Peer to Peer (P2P) payments

Last month, Australia’s Big Four banks have rolled out P2P payments (P2P) to their banking customers. P2P enables money to be sent and received in under a minute via a PayID or BSB and account number between participating Osko banks and financial institutions. Customers can attach up to 280 characters of text or emojis to describe the payment. Over 1.9 million Australian’s have already signed up for a PayID and this number is expected to grow as the service becomes ubiquitous. Osko is an overlay service which enables account-to-account real-time payments via e-mail and mobile phone numbers.

8. Bionic bank

According to Boston Consulting Group, a bionic retail bank uses customer insights to achieve sustainable, valuable, long-term relationships. Moreover, a bionic bank blends digital technology and a human touch to deliver the right products and services to target customers.

9. Voice activated banking

Last month, Westpac launched Siri for Westpac, an extension of its mobile banking app for iPhone users. The new feature allows customers to link their Westpac transaction account, make a payment to pre-existing payees and check their account balance through Apple’s virtual assistant Siri.

According to Westpac, a fingerprint or face ID scan authenticates payments before money is transferred to a payee—similar to the Apple Pay function on iPhone devices.

The new feature will be available to customers with the latest version of Westpac’s mobile banking app, and an iPhone operating iOS11 or later.

10. Budget management

FinTechs are offering a wide choice of budget management apps that provide consumers a range of ways to track and monitor their daily expenditure against their budget. From Pocketbook to Finch, Carrott, Acorns Australia, Alt, MoneyBrilliant, PictureWealth and Easyshare—check out the top eight here.

There’s no denying, the combination of the Hayne Royal Commission, technological advancements and disintermediation are driving increasing value for consumers in the financial services sector. This round-up gives us a small peak into the future of Australian banking.

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