AfterPay’s brave new world

Marc Kennis, April 6, 2022

25 October 2020

Last week, AfterPay’s (ASX: APT) share reached our price target as it shot through the $100 barrier. The company announced a deal with WestPac (ASX: WBC) that outlined the collaboration between the two companies. Starting in the second quarter of 2021, AfterPay will be launching new financial products for its customers, including savings accounts, using the WestPac’s Banking-as-a-Service (BaaS) platform.

This BaaS platform, which is Cloud-based, allows WestPac to partner with FinTech’s, like AfterPay, to rapidly bring new and existing financial services to market. In this case, the platform allows AfterPay to offer its customers savings accounts without having a banking license. That part is taken care of by WestPac, which is a major advantage for AfterPay as it doesn’t have the compliance and balance sheet obligations that a banking license brings. The kicker for WestPac is getting access to a new, large, potential client base, mostly the Millenial cohort, that has proven to be elusive to traditional banks.

We believe these types of collaborations open up vast new growth opportunities for Buy Now, Pay Later (BNPL) companies, not just in Australia, but globally. We see a brave new world where BNPL customers can use AfterPay not just to buy things in 4 installments, but can get a mortgage and open trading accounts with the company.