Westpac today announced it is partnering with 10x Future technologies, a UK-based cloud banking provider, to build a new core banking stack that allows third parties to offer Westpac banking products through APIs.
The new stack will be run separately from the bank’s existing business as a standalone platform.
Westpac says the deal will allow it to extend its banking capabilities and the platform could eventually be integrated back into its own core operating environment to lower costs and improve flexibility.
The initiative was announced today by Westpac CEO Brian Hartzer as part of the bank’s generally “disappointing” full year results. Hartzer announced the bank expects to make a minority equity investment in 10x.
The new cloud platform will allow third parties, initially Westpac institutional customers and fintech partners, to offer banking services even without their own banking license, with Westpac providing the banking capabilities in the background.
Last month Boston Consulting Group’s annual retail banking report warned incumbents need to adapt their technology stacks, including potentially shifting to service models, to fend off a rising threat of digital banks.
In the case of Westpac, a whole new banking platform is needed for the service model as many of the legacy systems it relies on for core banking services were never designed for the API connectivity required.
“A modern core banking stack allows you to support customer needs with new data and AI applications, while also significantly lowering the cost-to-serve,” said Westpac general manager of corporate and business development, Macgregor Duncan.
“And that’s what 10x is. While it’s still young technology, we see this as a way for Westpac to test and explore new capabilities that might become directly relevant to Westpac’s core business in the future.”
10x is a UK-based company founded in 2016 by former Barclays CEO Antony Jenkins. The company offers a cloud-native technology platform that claims to make banking “10x better for customers, banks and society”.
The 10x platform is designed to facilitate microservices and the latest cloud solutions with an open, API accommodating design, according to the company.