Afterpay takes on the banks: Banking app could double Aussie revenues
Broker Morgan Stanley says Afterpay’s foray into banking could almost double its Australian revenues by increasing customer increase engagement and cutting costs.
“Money by Afterpay will boost APT's shopping platform,” the broker said in a client note.
Buy now, pay later market leader Afterpay is set to launch its first banking products which are targeted at the valuable younger customers as the competition for that group intensifies,
The BNPL operator is going head-to-head with the banks by widening its offering so that the more than three million customers who use the app to make everyday purchases might deposit their salaries into the savings accounts.
The roll-out of 'Money by Afterpay' comes just when the BNPL players face increasing competition as Apple Pay, PayPal, and the Commonwealth
Money will have a physical debit card, digital wallet integration, and real-time payments. It will pay an interest rate of one percent on savings.
Once it is publicly available in October, Money will offer fee-free transaction and savings accounts in its new app, which will provide customers with an overview of their spending and saving.
“The Money app offers one daily account which will not charge customers fees, making it an ideal primary account for customers to directly deposit their salaries and view their complete financial position in one place,” the company said.
"The benefit of having so many different savings accounts is to allow customers to open separate accounts for different savings goals and to purchase different things based on their specific needs - large and small - from a house deposit to a new doona."
Customers will need an Afterpay buy now, pay later account to apply but the bank accounts will be managed by Westpac, with Afterpay acting as the distributor.
The new app will be tested by its Australian staff from Tuesday, and the company said it has got a financial service licence to provide debit cards and general financial product advice.
“Ultimately, with Money by Afterpay, our goal is to make managing your money simple, frictionless, and stress-free,” joint chief executives Nick Molnar and Anthony Eisen said in a statement to the Australian Stock Exchange.
“Money will broaden our relationship with our loyal customers and also attract a new group that’s looking to streamline how they manage their finances within the debit economy.”
To bring a Money app to life in ten months demonstrates that we can quickly move at pace to stay well ahead of customer expectations, the two executives said.
Interestingly, Afterpay shares were is down 30 percent in Australia on the news.