The global tech giant Salesforce is on the verge of exploiting Australia’s “consumer data right” by investing alongside Westpac Banking Corp and National Australia Bank in Basiq, the best open banking platform, that can offer its software end-users a more holistic view of customers’ financial status.
According to Salesforce, its investment was driven by its users – including Westpac, NAB, and ANZ, as well as other large companies, including Telstra – who are exploring how to use financial data that can accessible to customers under the consumer data right, to get deeper and enhanced insights that can help them sell more products and provide a rich and personalized experience.
Some of the largest banks are considering how Basiq can assist in increasing loan assessment by utilizing real customer spending data to meet higher expectations around responsible lending under the Hayne Royal Commission.
“Financial Data is a huge asset that helps provide insights on customers and provide more personalized products.” – Stated by Salesforce Ventures’ Rob Keith.
Salesforce’s investment came after former Microsoft CEO Pip Marlowe left Suncorp last month and joined Salesforce as its new CEO in Australia.
World’s Most Valuable Resource - Data
“Software is truly eating the world and data is becoming the new oil,” said Rob Keith of Salesforce Ventures in Australia. He added all companies need to make use of customer data to provide a personalized experience, and Basiq can help provide a 360-degree view of customers. This would be a great benefit that will helps customers get actionable insights and offer more personalized products. “
The next Reinventure Group investment in Basiq and NAB Ventures Westpac reflects how banks are shifting their thinking to open banking from a defensive position, where they are afraid to publish previously proprietary customer data to employ a more strategic outlook and focus.
Non-banking financial companies are also starting to think about how customer data rights will work for them. After banking, the scheme will expand to the energy and telecommunications sectors. Companies in these sectors may be able to gain authorization to review bank data and increase their offerings.
“Open Banking expands industries that will allow users to access financial data,” Keith said. “We see this as an opportunity for companies to get a 360-degree view of their customers, and most of the industries can access the data to develop better and secure products.”
Basiq also attracted the attention of another US data giant, Equifax, which sells Basiq’s core product: affordability assessment reports. These reports can give banks a complete picture of the costs and financial conditions of their clients in real-time by engaging in bank decision-making procedures. These can be used to determine whether or not credits must be given in accordance with responsible lending requirements.
Data Quality and It's Importance
“To win, banks need access to good quality data to understand each individual customer and not treat everyone as the same.” – Damir Cuca, the founder of Basiq. This process will significantly improve the status quo criticized by Hayne’s investigation, where banks are too dependent on spending estimated costs, such as household expenses. This activates the legal action against Westpac by the Australian Securities and Investment Commission.
Basiq is currently conducting its analysis by “scraping” out the account information that the client holds with other financial institutions. If they grant permission by providing their passwords with open banking data can be received through a cleaner, an application programming interface (API), which also requires customer agreement.
Basiq, who has applied to the Australian Competition and Consumer Commission to test Open Banking procedure from next month as a pioneer to gain the license to become an official data recipient, has developed analytics and algorithms that are run over the data to provide insights. These are also being used by big banks to price more competitive offers which the government considers as the regime’s main asset.
Basiq is currently working with 13 banks, financial advisors, and around 180 fintechs. “To make money, banks need to have access to quality data to understand each client and not treat each one as the same,” said its founder, Damir Kuka.
The arrival of neobanks who want to use data to attract millennial customers into deposit products and loans, he said large banks need to “act quickly”.
Westpac and NAB are existing customers of Salesforce, one of the most successful technology providers in the world and a pioneer of the cloud-based platform with a market value of $ 135 billion ($ 194 billion).
Data Quality: An On-going Challenge
Roehn Sood, a partner of Reinventure Group, said the bank developed “how to improve existing data and get the better insights from it, extract it and use it for something useful with the right type of agreement.” Loans are the first use case and we see many use cases for the Basiq platform.
Major banks not only look at the income and expenses but they also consider how to use open banking to improve customer financial education and improve billing processes to keep customers from getting into trouble.
Salesforce, the global leader in CRM, has heavily invested in its Australian expansion in recent years and currently has around 1,500 employees in Australia and New Zealand. It has created a “Financial Services Cloud” to help banks simplify the complex legacy systems.
Salesforce Ventures has been investing since 2009 and owns part of 250 global companies. This fund has a record of investment in global financial technologies including Stripe, Onfido, and Wefox. They have had also invested in US companies similar to Basiq such as Quovo, which have integrated into few products of Salesforce. Quovo was acquired earlier by Plaid, a US-based Financial technology company, for $200 million.