Westpac’s consumer banking boss says adding budgeting tools to its revamped banking app this week will create “stickier” customers that will be less likely to turn to fintechs, and may consider taking financial advice from the bank when a new regulatory model emerges.
The “personal financial management” (PFM) technology, developed by fintech MoneyBrilliant, which Westpac bought from AMP late last year, serves financial insights to customers based on transaction account data and offers tools to set budgets and track spending.
Westpac’s banking app is used by 3 million customers.
It will help Westpac catch up with rival Commonwealth Bank, which already lets customers set budgets for spending categories and shows them their monthly cashflow. ANZ also provides customers with transaction and spend analysis features.
Market research firm Forrester has ranked CBA’s banking app the number one in the market for several years, but said this month that Westpac was running a “close second”, before the launch of its money management tools.
Westpac’s banking app has 3 million active users, who use it 35 times a month on average; it hopes the new features will drive engagement higher.
Next year, Westpac will add carbon tracking and also plans to use the open banking regime to let customers connect non-Westpac accounts to the app to provide a full view of their financial affairs, and potentially to allow Westpac to switch them into products of its own.
It will also add a feature soon that lets users compare what they are spending, on things like energy bills, to groups of similar people.
“If you look at this capability, it does drive a lot of stickiness,” said Westpac consumer and business banking chief executive Chris de Bruin.
“Customers want simple, secure banking with relevant content for them, and obviously that means what is happening with their money and how it is organised. Our customers want control and want to control the data themselves.”
Like other banks, Westpac ceased manufacturing wealth and insurance products after the Hayne royal commission, but is thinking about how to provide digital advice if laws are clarified.
“We are still in the business of working with clients to improve their [financial] position. It is not wealth management advice, but we are observing and watching the trends like everybody else,” Mr de Bruin said.
“We do not think it is sustainable that the vast majority of Australians have no advice on what to do in the wealth space, and we think regulations have to change, so some basic wealth offering comes back into play, to help customers.
“People need a bit of help to figure out how to make themselves better off. If you budget and manage expenses better, you can create surplus.
“And in the current environment, where people are losing some of their discretionary budgets, it is a challenge to continue to save. Our tools help saving, and making them more aware of what going on with their money.
“When there is surplus, we can help people get a better return, and the most basic is a term deposit. Beyond that, giving advice on what to do is a gap that needs to be addressed.”
Forrester, which has been comparing and ranking major bank apps for seven years, said in a report last week that only 21 per cent of people “strongly believe” their financial institution cares about their financial well-being.
“This is a missed opportunity for banks to show customers where they spend their money and how they can save more effectively as well as to offer effective debt management tools,” it said.
“Banks should leverage financial and non-financial data to gain a clearer understanding of a customer’s real-time financial situation and offer relevant debt management and cashflow tools.”
Forrester said Westpac’s app had the best search features and chatbot. Last month, it was the lead investor in conversational artificial intelligence software firm Kasisto, which it plans to use to help develop a platform to make chatbots and smart assistants more effective and widely used.
Banks are extending apps into discounts and offers. CBA has a partnership with Little Birdie providing retail cashback and reward options. CBA has developed a “benefit finder” in its app to locate find rebates and has also been nudging customers towards making lifestyle changes based on more sustainable choices.
For example, in partnership with Amber Energy, CBA lets customers access cheaper wholesale energy prices and shift usage when power is cheaper and greener.
Under a new partnership with fintech Cogo, Westpac said it would help customers track their carbon footprint and make more environmentally friendly spending choices via a “Carbon Footprint Tracker” in the app from next year. CBA is also working with Cogo on similar features.
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