Technology – Banking – Innovation – the Perfect Synergy!


Innovation is the ability to see change as an opportunity – not as a threat, Steve Jobs

The Australian Retail Banking Summit 2017 held in Sydney recently promoted the theme “Retail – Ripe for Revolution” to focus on the ever-changing and developing banking landscape.  Key ideas covered FinTech and innovation, customer-centricity, Regulatory advancements and progression in the digital and technology spaces.

Cashwerkz actively supported the event as a Thought Leader Sponsor.  Our incoming CEO, Hector Ortiz presented his insights on innovation to create engagement leading into customers and their evolving banking relationships. We share below a synopsis of Hector’s presentation and the Cashwerkz solution.

“As a brief introduction, Cashwerkz provides a simple and secure innovative online platform to transact and manage cash investments.  The company was established in 2014 and released its term deposit platform to the market in 2016.

Today’s State of Play
The role of Term Deposits has evolved and over the past 10 years, we have observed steady growth for this asset class.  Households now have in excess of $840b in Term Deposits, notably $158b are via Self-Managed Super Funds (SMSF) – which equates to approximately 20% of the household total.

When reflecting on flows pre-GFC to now, we see a 2.25 times growth over this period in household term deposits.  In addition, in the same period, there has been a steady allocation of 25% to cash by SMSF’s according to Australian Tax Office (ATO) statistics.

So we can say that there is a solid foundation for growth!  But, how do we build on it?

Why Term Deposits and Margins
Let’s start with considering strategies to increase term deposit growth and briefly review why investors place term deposits at all.
Investors today place term deposits to maximise their return for 3 primary reasons:

  • Capital Preservation
  • Known Return of Capital
  • Stable Income

There are many other investment opportunities that have greater returns and therefore greater risk, but the growing number of term deposit investors seek a safe haven, which provides a guarantee to their capital.

The table below provides a snapshot of key market indicators (Source RIM Securities):

  • prior to the GFC (October 2007)
  • June 2012 – which represents the height of margins paid by term deposit providers; and
  • Now

Screen Shot 2017-05-31 at 12.13.44 pmWe see that although absolute term deposit rates are low, margins over 3 month Bank Bill Reference Rate (BBSW) are approx. 2.8 times higher than pre-GFC.

So, our question becomes – based on today’s term deposit margins, how do we attract more term deposit investors?


  1. Make it easier for investors to save
    Savings habits of the average consumer are slightly concerning with research (source RBS/RBA) displaying a decline in savings over the past 5 years – from 10% to 5%.  Should we interpret this that it easier to spend rather than to save?  Or is it simply inefficient and cumbersome for investors to save?
  2. Consider the Age Distribution of Australia’s Population
    We cannot look where to grow term deposits without looking at demographics, taking into account the digital age and who can most benefit and leverage from this.

Graph 2 Blog GK, 01062017It’s worth noting a few factors to help us understand where opportunities may lie:

  1. Retirees – not digitally empowered, but may use Facebook to stay in touch with family and friends; they may rely on more traditional methods of placing term deposits by visiting a traditional brick & mortar bank branch – however trends show a number of these branches are closing and if remote then this compounds the term deposit investment issue.
  2. Baby Boomers – grew up with the space race and great innovations in science and technology; tolerant of many online portals but they think that “there must be an easier way to invest in term deposit’s!”
  3. Gen X – grew up with computers in their homes; and
  4. Millennials – completely digital across all aspects of their life and confident to utilise, transact and manage their lives online.

Where we see the additional growth is highlighted in yellow – this group are leveraging technology by increasing their use of communications, media and digital channels expecting their client experience in term deposit investing to be easier.

Barriers to investing
Based on RIM Securities 13 years of experience, the fact has always been that investing in term deposits has been a manual, time consuming, frustrating and onerous process with barriers to invest.

Irrespective of the demographics, we see that term deposit investors basically can’t be bothered to maximise their cash investing. Only those who must invest in term deposits have wrestled with the current manual process to invest.

Let’s briefly look at the term deposit application process – one that varies greatly, with the fastest application in 2 hours and the longest up to 5 days before funds are debited – and it’s…..Manual, Manual and more Manual!  Not forgetting…..

  • Financial Planners are burdened by compliance requirements including Advice documents, Authority to Proceed signatures, numerous application forms and Limited Power of Attorney requirements;
  • Term deposit providers require a paper copy of the application with ‘wet signatures’;
  • Inclusion of all supporting Know your Client (KYC) documentation;
  • Challenges for investors to send the funds to the selected term deposit provider; AND
  • Maturity instructions to be advised or confirmed by investor via a signed instruction.

Breaking the Barriers

Screen Shot 2017-05-31 at 12.10.11 pmThere are several areas that require urgent attention to break down these barriers to investing:

  1. Need for term deposit providers to open an Application Programming Interface (API) to their platforms to allow real-time processing for placing term deposits;
  2. RegTech development in the form of an improved KYC / AML regime which allows the customer to own and manage their identity documentation and then grant service providers access to it;
  3. Client experience – improved personal engagement that is relevant and ‘customer-centric’;
  4. Distribution – Partnering with innovative FinTech providers to supply a digital channel to targeted market segments.

FinTech & RegTech
Without a doubt, compliance is important to us!

The easier we make placing term deposit’s; the more pressure is applied to be compliance agile.  Compliance requirements need to drive and formulate processes and embrace innovation to maintain the pace with customer expectations.  This challenge of balancing between client experience and regulatory requirements is NOT to be underestimated.

Ideally, KYC / AML requirements should be conducted electronically trusting the confirmations received by linked Gateways.  ASIC have recognised this and there is currently work underway in the RegTech space to make the compliance process agile.

Client Experience
Secondly, a great client experience is also a necessity.

We understand that service alone is not a customer experience.  There is a need to remove any friction that is preventing customers from investing; instead delight them by removing all manual processes associated with the customer onboarding activities, thus saving them time and creating efficiency.

There is a need to create and build trusted relationships faster across all levels of engagement to further drive innovation, thus allowing clients to provide and have access to their financial history and data.

Finally, the aim of distribution to match investors with the term deposit provider’s.

Today, part of any investment process is research – thanks to the power of Google, this is now easy. Investors may compare up to five different providers and offerings prior to a decision – making informed choice important – as is ‘omni-channel’ presence.

Digital banks are emerging with APRA currently reviewing a new application, which allows services to clients from a mobile phone and upwards.  They plan to have an open API which will enable them to outsource portions of their funding to firms like Cashwerkz.

For existing Term Deposit providers, Cashwerkz will be able to help target investors across a number of profile segments – customer type, investment track record, geography, direct investors, SMSF or managed investors in addition to demographics. Depending on the strategy, implementation of tiered pricing structures will be available for targeted segments.  Leading with innovation, near real-time dynamic pricing can well serve their retail distribution strategy.

Innovative Retail Funding – What Does the future Look Like?
Australia is a leader in accepting FinTech solutions compared to our global counterparts.

Artificial Intelligence (AI) is already making inroads within FinTech.  AI / Machine Learning tools will help investors with decisions by providing suggestions – eg. the ability to map out possible investment choices not normally considered by the Investor, influencing them to vary their customary term deposit order.

Tailored Value-Add Solutions – customers will own their historical banking data providing access to approved service providers.

Virtual Reality Banking – the ‘gaming experience’ simulating multiple bank branches with traditional elements, including other service providers that help facilitate the term deposit process via a headset without leaving your lounge.

Simplified KYC/AML – term deposit providers accepting e-verification via a trusted and approved electronic process.

As a final thought, I leave with you –
If you believe in technology and building wealth by building a better future, we’d love to connect with you.

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