National Australia Bank is partnering with a range of other organisations, and investing in startups, to broaden the range of services it is able offer customers and to bolster its position in the face of a range of players that are competing for segments of its business.
Jon Davey, NAB's executive general manger of digital & innovation detailed some of these initiatives in a presentation at the Sibos banking conference in Sydney this week.
He said the bank was driving innovation into all the services it provides to customers, but as "the largest business bank in Australia, with SME core to our business," saw this market as particularly important.
"More than 30 per cent of business lending is generated by digital channels," Davey said. "For a bank that has a very large distributed sales force that's a very significant change.
"More than 50 per cent of our customers log on to one of our digital channels every day. We are seeing enormous growth and enormous demand.
"These customer changes are real and are taking place at a pace we have not seen before. … We need to make sure that we match the experiences our customers are expecting, which are being set by other technology businesses. To be able to do that were also looking at how we can use data to significantly improve the experience we are providing."
To address these challenges, Davey said the bank was focussing on third party partnerships and its two and half year old $100 million venture fund, NAB Ventures.
"At NAB our innovation teams are made up of three key functions. First we have the NAB Ventures team. It looks to invest in new and disruptive business models that will help NAB to deliver significantly better experiences to customers, and it will also help us understand some of the change taking place.
"We also have a function called NAB Labs, a team set up four years ago. It has been a focus for us about driving experimentation and how we can bring new products to market… We also have a digital partnerships team looking at how we can build out partnerships with third parties and make sure we have the commercial arrangements to understand the value we have created."
One of NAB's most significant partnerships, Davey said, is with real estate website Realestate.com.
"We have built an end-to-end experience that allows a customer to do a property search and as they are collecting information we are starting to approve, on a conditional basis, lending up to a certain amount," he said.
"What we are trying to do is to create an experience that removes some of the friction associated with the property search experience, but that, importantly for NAB, also provide us with an opportunity to support that customer with home lending."
NAB is also about to launch a significant partnership offering with Xero, in which it was an early investor through its Bank of New Zealand subsidiary.
"In the next few weeks we will launch a payments capability into the Xero ecosystem," Davey said.
"A Xero customer that banks with NAB will be able to initiate payments or multipayments and payroll through Xero with approval taking place through NAB.
"We are trying to support our small business customers that use Xero to remove some of the friction associated with making payments. It is a very different experience from the one they have today."
More recent startup investments have been into Medipass and Look Who's Charging.
Medipass enables people to book appointments with medical practitioners, pay and claim rebates via their mobile device.
"Look Who's Charging addresses the experience a customer has when they look at a transaction list and wonder who on earth some of the merchants are," Davey said.
"It uses AI to enable us to match a merchant ID with their trading name and present that information to the customer via a digital channel.
"It makes a significant reduction to the number of calls to our call centre. It has allowed use to bring a new capability to market quickly by working with a third party."
NAB Ventures' most recent investment, announced earlier in October, is in Slyp, a company that collects receipt information when customers pay for something with a card, creates a smart receipt and links it to the customer's banking app so it appears next to the transaction in the that app.
Davey said that, over the past year NAB Ventures had tracked over 1900 companies in Australia and overseas, had qualified over 400 of those and invested in 12 of them.