Tensions between Australia’s big banks and the world’s biggest technology company Apple have ratcheted up after the iPhone maker surprisingly ordered Westpac to remove a key feature of its recently revamped mobile banking application, which let customers make payments in popular chat applications.
In a letter to customers, seen by The Australian Financial Review, Westpac reveals that its Westpac Keyboard function will be removed in July, meaning its innovative plan to enable customers to make payments from within popular apps such as Facebook Messenger, WhatsApp, Snapchat and WeChat has been cut off at the knees.
The move is a significant blow to the bank, which is attempting to appeal to the next generation of young customers by providing new mobile services, and get banking services ingrained in their digital lives. Despite only being available for three months, the Financial Review understands it had already been installed by tens of thousands of customers.
It comes at a time when banks around the world are seeking to secure teens and young adults as customers for the future, amid concerns that banking services could be targeted by technology companies, including Apple, Google and Facebook.
The keyboard extension was unveiled in March, with consumer banking head George Frazis saying it formed an important part of a broader plan to take banking to younger customers, rather than make them come to the bank.
It worked by letting customers change the default keyboard in social messaging apps to Westpac’s and enabled them to make payments to friends, family and businesses.
The Westpac Keyboard was based on technology from Israeli fintech company PayKey and let friends send money to each other in messages, or send cardless cash codes, which could be used to withdraw pre-determined amounts of money out of ATMs.
When contacted about the changes a Westpac spokesman confirmed that Apple had pulled the pin on its efforts. The feature was not yet available on Android phones, but they said it still intended to make it available soon.
“This is disappointing for us and the thousands of customers who are currently using it,” the spokesman said. “We apologise to our customers for any inconvenience caused and thank them for their continued support.”
The bank declined to comment on the reasons behind Apple’s decision, but sources told the Financial Review that Westpac had already addressed security concerns initially raised by Apple and had the app approved from that perspective.
It is understood that bank technology staff have been left perplexed by a generic explanation letter from Apple, which suggested that keyboards should not be able to send money, or that it may offend some users.
While Westpac’s keyboard app extension was the first in the Asia Pacific region to enable payments, a search of other banking apps, shows that Apple has previously approved similar apps from other institutions, including India’s ICICI Bank and Spain’s Banco Sabadell and CaixaBank.
Apple declined to comment specifically about Westpac when contacted about its ruling on the Keyboard app, however it is understood that the company advises developers against adding payment options to keyboards due to security concerns, as they could be given permission to work across apps of all kinds.
It directs app developers towards using payment functionality in its own iMessage app, rather than encouraging users to use rival services.
When asked about other banking apps around the world currently enabling keyboard payments, Apple again declined to comment.
One banking technology industry insider, who declined to be named due to existing relationships with the companies involved said there were only two possible explanations for a seemingly compliant app to be removed from Apple’s ecosystem. One was concerns about future security issues arising and the other – which he believed to be most likely – was that Apple wanted to launch its own payments keyboard and had been beaten to the punch.
“If Apple lets Westpac do this then it will be compelled to let other banks do it, and not all global banks have Westpac’s capability and resources. So if any bank anywhere globally screws it up; then Apple is the one that wears the hit by association,” he said.
“However at this stage it really does look like an anti-competitive move from Apple, where they are just shouting ‘get off my future lawn’.”
When asked if it intended to launch its own keyboard payment function in future, Apple’s spokesman said the company does not discuss future product development plans.
The news stands as a further souring of the relationship between Apple and some of Australia’s biggest banks, after Westpac was among a group of institutions alongside Commonwealth Bank of Australia, National Australia Bank and Bendigo and Adelaide Bank, which unsuccessfully asked the Australian Competition and Consumer Commission to allow them to collectively bargain with Apple over access to the iPhone’s “near field communication” controller.
The banks are angry that they are unable to install their own digital wallets on iPhones, despite being able to do so on phones made by other handset manufacturers. So far only Australia and New Zealand Banking Group of the big four has done a deal to allow its customers to use Apple Pay.
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