Big banks ‘losing visibility’ of Millennial, Gen Z customers

Rebecca James, chief executive of Humm Group, said financial institutions had little choice but to partner with buy now, pay later providers.

“They were starting to lose visibility of a key market,” Ms James said. “I think you’re going to see a lot more collaboration with mainstream banks.” She pointed to Humm’s partnership with Mastercard as evidence.

If you think about the innovation that Afterpay introduced, that was very clever.

— George Frazis, Bank of Queensland

But notwithstanding the spirit of collaboration, venture capital investor Simon Cant told a separate Summit panel on Tuesday that the buy now, pay later players will increasingly muscle in on mainstream banking business lines.

Asked whether the banks face a “danger” of being disrupted by the likes of Afterpay, venture capital investor Simon Cant said: “Danger? I think it’s an inevitability.”

While Afterpay’s “genius is their focus”, the Reinventure boss tipped the fintech juggernaut would expand into the provision of other financial services once its core revenue line “starts to peter out”.

“They’re already obviously going into banking with the relationship with Westpac, but they’ll want to get deeper into various revenue lines and offer a wider range of services,” he suggested.

BoQ BNPL?

ING Australia chief executive Melanie Evans noted the rate at which Afterpay had acquired merchants presented a particular competitive threat.

“We often focus on the customer [growth] but there is a big business play here too,” Ms Evans said.

Meanwhile, Bank of Queensland chief executive George Frazis flagged the possibility of a tie-up with one of the players in the nascent buy now, pay later market.

The relatively new CEO says BoQ is focused on two key pillars – helping customers buy homes and extending funding to businesses. To drive those two parts of the business, BoQ wants to partner with leading technology providers.

Asked if that means working with a buy now, pay later provider, Mr Frazis said: “If that’s a service that our customers require, absolutely. We’ll be looking at partnering with the leading players to deliver that service.

“If you think about the innovation that Afterpay introduced, that was very clever,” Mr Frazis said. “If you look at our business, we’re very focused and quite simple.”

The banks are diverging in their approach to taking a slice of the buy now, pay later market.

Commonwealth Bank has launched its own competitor to market leaders such as Afterpay and Zip, while Westpac has taken the approach of providing back-end banking capability to Afterpay, allowing the platform to provide banking products to its customers.