Next month ASB bank, the New Zealand subsidiary of Australian giant Commonwealth Bank of Australia (CBA), will unveil new, tight integration with cloud accounting software provider Xero.
Applications written for Xero will be able to perform online banking directly from within the app, via APIs, without any need to visit the bank’s portal.
When enabled they will, for instance, be able to pay bills directly from within third party apps and authorise these, as ASB’s consumer customers already do, by entering an authorisation code they receive by text message.
ASB’s general manager of commercial and rural banking, Steve Jurkovich, told ZDNet.com that ASB went real time very early, in 1969.
The bank's CEO in the 1990s, future CBA chief Ralph Norris, was also a visionary on mobile technology. Jurkovich remembered when he first joined the bank in 1997, Norris picked up a mobile phone and said: “These things are just a credit card with an aerial”.
“That was a long time before people began to think like that,” Jurkovich said.
It was also a long time before ASB’s parent took the plunge. CBA has invested A$1.3 billion to come up to speed on real-time banking with SAP, a project that has reportedly engaged 1500 people full time for six years.
CBA chief executive Ian Narev described rival banks’ real time capability as “window dressing”, a view echoed by Jurkovich who described fast batch processing as “spoofing” the real thing.
Narev added CBA also had to respond to threats from non-traditional competitors such as Apple, PayPal and Google.
“We had an answer looking for a problem. Real time on the internet is the default standard,” Jurkovich told attendees at last week’s Xero partner conference.
It was after Xero’s CEO Rod Drury delivered a few “home truths” to ASB’s management team, comparing them to the record companies of ten years ago, that the bank’s thinking about customers changed.
“What has become really apparent is that the way we think about the customer is pretty broken,” he said.
“Banks spend a lot of time thinking about their customers but customers don’t spend a lot of time thinking about their banks.”
Banks have to make it as easy as possible for customers to transact through whatever channel they favour. They have to deliver enriched functionality.
With businesses now being enabled on mobile platforms, app integration is key to shifting from a compliance-based approach to a forward-looking one, Jurkovich said.
And that does not mean forcing users to use ASB’s own banking apps, but instead allowing them to transact from within apps supplied by the likes of their ERP and financial software providers.
That in turn requires banks to make it easy for their customers’ business partners, Jurkovich told an audience of Xero’s accounting partners. Accountants want to have meaningful, forward-looking conversations with their customers rather than engaging them once a year at tax time.
“We have to get away from the rear vision mirror and enable conversations about the future,” he said.
Xero, for instance, has teamed with farm software firm Figured to develop a cloud-based service to manage their farms online, to be launched mid-year. It will include functionality such as livestock reporting as well as accounting.
Jurkovich said there was “massive” upside possible in rural business.
“Bank transactions feed automatically into your Xero account,” Jurkovich said, “We have to make sure it just works and works easily.”
ASB has also allowed more flexibility about when feeds start to allow historical information to be included.
The same applies to real-time multicurrency capability and interactions such as lending applications. Jurkovich said mobile development has progressed so fast over the last 18 months it is the equivalent of 14 years of internet banking on the desktop.
“This is a real competitive advantage for us and for your customers,” he told Xerocon.
Customers can access banking any time on any device and even on the app of their choice.
And all of the intellectual property is being fed back across the Tasman, said the ASB’s executive general manager of technology and innovation Russell Jones.
Because ASB and CBA have different customer profiles they tend to prioritise development for different platforms. As ASB’s customers tend to be smaller businesses, it develops for the likes of Xero first followed by MYOB and others.
CBA, conversely, will develop first for systems such as SAP and work down, feeding that development back to its subsidiaries.
Jurkovich said in the next few months ASB will enable real-time integrated conversations about lending and be able to provide real-time answers, potentially eliminating paperwork and four to six week waiting times.
And it’s all based on an underlying investment built and improved over 45 years.