4 fintech innovations from 2020 that we hope are here to stay
If 2018 was the year of the New Payments Platform and 2019 the year in which the first wave of neobanks to hit our shores, the ‘innovation identity’ of 2020 in the Australian banking sector seems a lot fuzzier.
That’s not to say there haven't been some significant innovations and rollouts throughout the year though. The launch of Consumer Data Right (CDR) in July was a considerable milestone in the move towards Open Banking in Australia, though the real impact and benefit of the CDR service is likely to borne out in the next few years.
There have also been some smaller, though no less useful developments from individual banks, neobanks and fintechs throughout 2020, some of which you may have missed.
So here are four innovations that we hope are a sign of things to come.
Up launches TransferWise integration
When Australia’s neobanks were first being talked about, one of the more promising parts of their future introduction was the possibility of collaborations between these new banking players and other fintechs.
In August this year, Up turned this idea into a reality with the announcement of a partnership with global international money transfer giant TransferWise - the first such integration between TransferWise and an Australian bank.
The collaboration means that Up customers can make international transfers in 48 different currencies ‘in seconds’ via TransferWise - all from Up’s app.
“Partnerships like this deliver a new way to think about banking,” said Up co-founder, Dom Pym, at the time. “Where traditionally banks may have chosen to provide this service themselves, Up has continued to turn banking on its head and find the most seamless, customer friendly ways to provide services customers love.”
Frollo showcases the possibilities of CDR
As mentioned above, Consumer Data Right (CDR) officially launched on July 1, 2020, paving the way for Australians to share their existing financial data more easily with financial providers.
Sydney-based fintech Frollo was one of the first Accredited Data Recipients under CDR, which means that big four bank customers (the only banks currently set up as Data Holders) can now share their banking data with Frollo and reap the insights that can be provided by Frollo’s app.
According to Frollo, banking data from its users can help it identify where they might be paying too much and when they could save by switching from their existing bank to a new provider.
Obviously this is just the start, but Frollo has provided a good example of the benefits to come under CDR. If all goes to plan, in July 2021, all other non-major banks, building societies and credit unions will also be required to allow their customers to share product, account and transaction data for all banking products.
Athena rolls out automatic rate drops
Interest rate reductions really did dominate the headlines this year in the home loan world, so you might have missed the introduction of a new rate tier system from fintech Athena. The online lenders' new “AcceleRates” rate tier system provides borrowers with automatic rate discounts as they pay their loans off.
For example, owner occupiers at the 70-80% LVR tier can currently receive a 2.29% rate (2.23% comparison rate*), but once they move down to the 60-70% LVR tier they’ll receive a rate of 2.24% (2.21% comparison rate*).
“Aussie borrowers are frustrated by painful negotiations with their current lender to get a fair rate,” said Athena co-founder, Nathan Walsh, in August. “That’s why Athena wants to motivate, encourage and reward customers for paying off their home loan and also have peace of mind knowing that once they hit the lower tier, we will drop their rates for them automatically.”
Of course, lower rates for owners with lower loan-to-value ratios is nothing new. In fact, they’ve become more popular in 2020 as lenders have sought to court ‘safer’ refinancers with greater established equity during the pandemic.
However, as Walsh said, existing customers would usually need to haggle with their lender rather than receive a rate drop automatically - a win for anyone who doesn’t love haggling over the phone.
Bill predictions go mainstream with CBA
It’s not hard to forget about upcoming bills these days when you’ve got regular debits coming in from streaming and app subscriptions, electricity, mobile and internet services and more! So it’s not surprising that banks have started to deliver ‘smart’ bill predictors in their apps.
Aimed at giving users a heads up on upcoming bills - both so that they can avoid late fees and cancel any unused subscriptions - 86 400 was certainly one of the earliest, if not the first, banks to introduce bill predictions last year with its ‘Coming up’ feature.
But the Commonwealth Bank also has also jumped on the bill predictor bandwagon with the launch of its ‘Bill Sense’ feature in September which shows app users how much they’ll need to set aside for upcoming bills and predict bills up to 12 months in advance.
“Managing today’s finances, while also preparing for tomorrow is difficult for anyone,” said CBA’s head of behavioural economics, William Mailer, on the launch of the new feature.
“Smart digital services which make trade-offs between today and tomorrow clearer, can help us to keep control today, and stay on track towards our goals.”
RELATED: Xinja discontinues transaction and savings accounts
These are just some of the more innovative features and trends that we hope to see more of in 2021 and beyond. To catch up on some of the major movements in the industry, check out our article on how Australian banking changed in 2020.
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