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NAB teams with global banks for fintech challenge

James Eyers
James EyersSenior Reporter

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National Australia Bank is expanding its strategic partnership with three global banks – Britain’s NatWest, Canada’s CIBC and Brazil’s Itau Unibanco – and will launch a new “challenge” to identify developers who can help the lenders keep pace with the global acceleration of fintech.

NAB chief executive Ross McEwan, who ran NatWest Group between 2013 and 2019 when it was known as Royal Bank of Scotland, is backing the alliance as a way for the bank to share costs and lift its technology expertise.

NAB chief innovation officer Howard Silby: “We are trying to broaden the net to open us up to some wide innovation possibilities.” 

The four banks are working together on information security and are planning deeper collaboration around open banking and blockchain, after last month announcing a carbon trading platform to create a transparent and liquid marketplace for carbon credits.

The quartet has launched a “global open finance challenge”, which NAB chief innovation officer Howard Silby said would help NAB access ideas from a global talent pool to improve customers’ banking experiences.

The banks have created 28 application programming interfaces (APIs) in a global development “sandbox” that will allow developers – to be chosen by the banks following an application process – to use bank data to create apps or other new services alongside Amazon Web Services (AWS).

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Applications opened on Monday, with the banks planning to take on 100 teams. They will be mentored through to October, when a dozen of the best ideas will be judged by the four banks’ CEOs.

The banks want to work not only with existing start-ups but also university students who have not yet created a company.

Contrasting strategies

NAB’s international fintech collaboration approach contrasts with innovation strategies at the other major banks. Last month, ANZ spun its innovation unit ANZi out of the group to provide it with more scope to create outside the bank’s processes.

Commonwealth Bank’s x15 Ventures unit has been busy creating new companies which CBA is developing as strategic assets.

Westpac had a head-start on its rivals with the early creation of Reinventure Group but has lost some momentum given the necessary focus on risk and compliance problems and complex asset sales.

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Mr McEwan reset NAB’s innovation strategy in April last year and group-wide innovation is now being led by Mr Silby. NAB recently bought the neobank 86400 to bolster its digital bank, Ubank, and is working closely with AWS to move various NAB apps to the cloud.

Members of the global alliance are also working with AWS, which will guide the 100 developers chosen to take part in the challenge. Amazon’s global chief technology officer, Werner Vogels, will be a judge alongside Mr McEwan, NatWest CEO Alison Rose, CIBC CEO Victor Dodig and Itau Unibanco CEO Milton Maluhy Filho.

We believe in partnering to innovate faster. We are hoping as a result of this challenge we can find some partners to work with.

Howard Silby, NAB chief innovation officer

The CEOs are looking for new offerings that will help customers make better decisions around climate and sustainability issues and improve the experience of retail and business banking customers.

Mr Silby described the challenge as “an evolution of the hackathon concept”, with the difference being the several months of mentoring and CEO access.

“We think this is the first event of its kind in the world to take this approach, rather than the short time-bound, solve-a-particular-problem hackathons. We are trying to broaden the net, to open us up to some wide possibilities,” he said.

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Winners will probably be brought on as partners of the banks, and ideas could be funded from NAB Ventures and the other banks’ VC units.

“We believe in partnering to innovate faster,” Mr Silby said. “We are hoping as a result of this challenge we can find some partners to work with.”

KPMG’s latest Pulse of Fintech report, released last week, found global fintech investment had rebounded in the first half of calendar 2021, rising to $US98 billion ($134 billion) from $US89 billion the second half of 2020 before Square’s blockbuster acquisition of Afterpay was announced. There were 2456 global fintech deals during the first six months of this year.

“Partnership models will be a critical means for companies looking to expand their service offerings,” KPMG said.

James Eyers writes on banking, payments and fintech. He is a former legal and investment banking editor at the AFR, has degrees in commerce and law from UNSW, and is co-author of Buy now, pay later: The extraordinary story of Afterpay Connect with James on Twitter. Email James at jeyers@afr.com.au

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