SocietyOne, one of the original fintech start-ups that venture capital fund Reinventure Group invested in back in 2014, is expected to pursue an ASX listing this year. Its shareholders include News Corp, Seven West Media, Australian Capital Equity and Consolidated Press Holdings, which have been helping drive customers to its website.
It has originated more than $1 billion in loans and has 75,000 customers, but more than half of the 80,000 customers that hit its website each month are seeking mortgage deals.
SocietyOne CEO Mark Jones said it would consider offering home loans after the transaction account is in market. Data generated from the account will be used by SocietyOne to develop a better picture of its customers.
The 10X technology, which Westpac invested in last year, forms the core banking layers for banking-as-a-service, which the bank could launch as a stand-alone brand. It provides a growing opportunity for Westpac as institutional and fintech partners look to integrate digital banking services with their customer mobile apps, the bank said in a statement.
SocietyOne will launch an app that customers can use to access credit scores, apply for and manage SocietyOne loans, and also manage deposits, withdrawals and money transfers from the new transaction account. It is an example of an emerging structural shift that is allowing core banking services, including deposits and loans, to be offered by non-bank apps through Westpacs licence.
Afterpay and Westpac announced a similar partnership in October. Afterpay is operating its banking strategy under the name AP Money and plans on launching its deposit accounts this year. Afterpay will provide an update on the strategy when it releases its half-year result on Thursday.
Afterpay has said its deposit strategy would let it develop a better understanding of customers, especially if it can convince them to put regular pay into the accounts, which could see Afterpay become the main financial institution for many of its Millennial customers.
National Australia Bank is the leading institutional big four bank funding fintechs, including providing Afterpays main domestic facility. Through 10X, Westpac is also focusing on partnerships, while CBA seeks to build its own, majority-owned start-ups through its X15 Ventures incubator.
We recognise that Australians are looking for new and different ways to do their banking, and by partnering with established brands and leveraging our combined data resources, we can provide better, more personal experiences for customers, Mr Duncan said.
Westpac has been driven into the banking-as-a-service strategy to attract younger customers, where it is underweight compared to Commonwealth Bank, which has been able to attract teenagers through its school banking program Dollarmites, although this is coming under increased scrutiny after a ban in Victoria.
Westpac has had a close relationship with SocietyOne since Reinventures investment in 2014, sitting on the board and helping to develop risk management procedures, although it has also been wary about cannibalisation of its personal lending loan book.
Westpac executive Jason Yetton, who backed the creation of Reinventure, ran SocietyOne between 2016 and 2018 before returning to banking through Commonwealth Bank and is now back at Westpac.
Reinventure is currently raising funding for a fourth fund that will be open to investors beyond Westpac.
SocietyOne started as a peer-to-peer lender where individual investors funded pooled loans before it focused on more stable and deeper funding sources from professional investors and mutual banks.
Westpacs 10Xs push will present a challenge to Volt Bank, which has pivoted to a similar strategy that involves lending its licence to non-banks keen on holding deposits. Westpac is now fighting aggressively to win the space.