Social media behemoth Facebook is looking to partner with Australian banks to explore opportunities in mobile banking, in a move that could radically change the face of retail banks.
Paul McCrory, head of financial services Australia at Facebook, said the $428 billion tech giant has built “huge mobile platforms” that see 11 million Australians a day. Facebook sees opportunities in leveraging that scale to do business with Australian banks.
“Banks are mobile businesses as well, except they also have legacy [systems] that sit behind them. How do we help partner with this vast scale we’ve got, to help a bank, for example, drive digital options?” Mr McCrory told The Australian Financial Review’s Banking and Wealth Summit in Sydney on Tuesday.
“How do we help the banks drive more and more people to use mobile services of some description, rather than having to go to a branch?”
Facebook does not have any immediate ambitions to roll out systems that compete with Australian banks – but it is increasingly dabbling in the payments arena overseas. Last year, Facebook unveiled a new payments feature for Facebook Messenger users in the United States, allowing users to make person-to-person payments by adding their debit card details on the Messenger service. Commonwealth Bank of Australia launched a Kaching app for Facebook in 2013, which allowed CBA customers to conduct their internet banking without leaving Facebook, but it was a flop and was ultimately canned.
Colin Barnard, the industry leader for finance at Google Australia, told the summit the global search giant would look to enter financial services only when it can create global scale and create a clearly better experience for customers. He flagged Android Pay, which is expected to launch in Australia soon, as an example of where Google could add value, but he said the company was not interested in entering industry verticals in particular countries.
Important role in fostering innovation
Mr Barnard said regulators and government “have a really important role to play” in fostering innovation and commended the Reserve Bank of Australia for driving the banks to create the New Payments Platform, a new piece of open-source infrastructure being built that will move the payments system to real time.
“When regulators do things to stoke innovation, which the government is trying to do, I think that can be a real force for good,” he said.
However, he pointed to regulatory requirements that various data be kept on servers in Australia as inhibiting the roll-out of Gmail in Australia’s banks. “I am a bit concerned when I talk to financial services companies. I get a lot of [responses that say], ‘I would love to do that but …’ – and the but is usually the regulator.”
The global technology giants were also sceptical of the ability of the incumbent banks to fend off the threat of disruption.
Mr Barnard said ANZ’s poaching of his former boss Maile Carnegie to become head of digital banking was a sign of good intentions, but he predicted the size of the bank might make it difficult to innovate at pace.
Mr McCrory said banks had been talking for years about using data to enhance customer experience “but I am yet to see it”.
The comments come after Ken Henry, chairman of National Australia Bank, told the summit on Tuesday that “all of the roles played by banks are contestable”.
Dr Henry said the $67 billion NAB has pumped funds into simplifying its technology platforms, slashing complexity and improving its digital interaction with customers.