Fig 3.0 – Zip Rebundles a Bank⁷

They started out as a revolving line of credit (Zip Money), then moved into in store and online payments (Zip Pay), then acquired a personal finance manager (Pocketbook), then into business loans (Zip Biz), then into virtual card issuing (Shop Everywhere). Zip has begun to offer not one, but multiple products that Banks had previously offer – typifying ‘Rebundling‘. The list goes on:

• Afterpay announced a partnership with 10x to offer Savings accounts and personal finance management (PFM) as part of ‘Afterpay Money’
• Neobank 86 400 are now offering home loans via a broker network, in addition to their neobank and PFM product
• Raiz Invest allows you to invest in managed funds, as well as take out single item insurance
• Spaceship allows you to invest in managed funds, and now you can keep your Super there
• Early wage access companies allow you to access your wage before it is paid, while offering sophisticated personal finance management tools
• Revolut initially offered great FX rates, and has now grown into a personal finance manager and even crypto investing platform
• BNPL Humm spawned ‘Bundll’ allowing you to shop anywhere that accepts Mastercard and you can repay the balance over time
• Wise (previously Transferwise) offers a travel / debit card as well as serving as a remitter
• Airwallex released a corporate expense card, as well as accounts, as well as FX, as well as card issuing

The traditional banking ‘one stop shop’ has moved away from a branch to the palm of your hand. Propelled by the digitsiation of money, the low barriers to entry and increasing customer choice, Banks are increasingly focusing on their core and letting Fintechs provide the swanky experiences. This has paved the way for Fintechs to Rebundle a Bank’s product suite under your brand. What we’re witnessing is the decentralisation of Banking – away from “That’s who you should go to” toward “What suits you best?“. 

What are Banks doing?

Banks are not oblivious to the Fintech threat. Although Rebundling is the next wave of Fintech – there’s no Fintech in Australia that can claim they provide a one-stop-shop for all your financial needs. In fact, according to the ABA⁸, upwards of 19 million Australians have a unique account with a Bank. If the legal age to open an account is 14 (excluding

CBA’s Dollarmites and Westpac’s Bump) – roughly ~95% of Australians have an active account / relationship a Bank (whether it be a Big Four, Tier 2, Tier 3 etc). If you include NAB’s study of financial exclusion in 2014⁹, this figure is closer to 99%. Fintechs aren’t replacing Banks yet. But as they Rebundle, they will get progressively closer.

References

1. https://www.opengrowth.com/article/can-fintech-ever-replace-banks-in-the-future
2. https://tomloverro.com/post/102797126721/banking-is-under-attack-heres-a-screenshot-of
3. https://tomloverro.com/post/102797126721/banking-is-under-attack-heres-a-screenshot-of
4. https://www.invoiceinterchange.com.au/australian-fintech-growth-opportunities/
5. https://www.canstar.com.au/credit-cards/buy-now-pay-later-vs-credit-card/
6. https://www2.deloitte.com/uk/en/pages/financial-services/articles/re-bundling-the-bank.html
7. https://en.wikipedia.org/wiki/Zip_Co_Limited
8. https://www.ausbanking.org.au/data/
9. https://www.nab.com.au/content/dam/nabrwd/documents/reports/financial/2014-measuring-financial-exclusion-in-australia.pdf