While it remains to be seen whether these products will land in Australia, the prospect of a large tech company associated with a foreign bank appears to be a far greater competitive threat to Australian banks than anything they could inflict on themselves. to each other.
Details of Apple’s buy-now and subsequent payment plans remain scarce, and banking strategists will ponder worrying possibilities. What if Apple’s decision was less to buy now, pay later, and more to offer users, who use existing bank debit cards with their iPhones, options to take out credit from Apple’s partner bank? immediately, in the Apple wallet? The Bloomberg report this week also noted that Apple is “testing a feature that will allow users to create temporary Apple Pay Later digital credit cards for individual purchases.”
Major Australian banks have been concerned about Apple’s entry into financial services for at least five years now. In 2016, after ANZ stole a march by making a deal for its customers to access Apple Pay, the other three big banks took Apple to the competition regulator, where they argued for the possibility of collective bargaining for get a better deal on fees. Apple was looking.
Banks were also concerned that Apple’s restrictions on access to its iPhone chip that communicated with payment terminals would limit the ability of their digital wallets to compete.
The ACCC rejected their requests and all three reluctantly followed ANZ and turned on Apple Pay because customers demanded it. But now the same problem is looming globally: the European Union is investigating whether Apple’s restrictions on third-party access to its “near-field communication” chip on the iOS platform are anti-competitive.
Australian policymakers are aware that the regulatory scope is widening and that Apple and Google’s interest in financial services will redefine the assessment of competition concerns in the industry. Elements of nationalism are already emerging: For example, banks are lobbying against global tech companies that can access their customers’ banking data under the open banking regime without sharing anything in return.
“The Apple Pay and Google Pay wallets illustrate some of the new and complex issues that are emerging,” Reserve Bank Governor Philip Lowe said in his annual address to the Australian Payments Network in December.
These include requirements relating to the processing of payments by the platforms’ own payment systems and the nature of the protections that apply to funds held in new payment systems outside the formal banking sector.
Given the importance of banks to economies and high levels of regulation, Apple, Google and other tech giants will inevitably find that making changes in sectors such as banking and wealth will be more difficult than software or music.
But the emergence of “integrated finance” – which allows non-banks to hire banking licenses and infrastructure from regulated banks, via “bank as a service” (BaaS) offerings – means that more large number of unregulated businesses, because banks always will be. able to provide financial services to improve customer experience.
For traditional lenders, it will therefore be essential to maintain close and trusting relationships with clients. The distribution of financial products in the age of smartphones is very different from sprawling agency networks.