How Up Bank plans to target millennials

- By Collaborative Media & Publishing

New digital bank entrant Up Bank has been built to attract millennial customers who don’t understand how traditional banking works.

Payments is central to the vision because it’s a core part of traditional banking – using BSB numbers, direct entry, waiting for overnight clearance – that many millennial users don’t have any experience of.

Up Bank has used Osko by BPAY® from the outset and were able to incorporate instant social payments at the centre of their customer experience rather than as an add-on. Up Bank aimed to show payments in a more intuitive way and recognised that for a young person on a limited budget, getting money paid back instantly is more important than for other consumers.  They have now also implemented BPAY due to customer demand.

“We wanted to make payments more of a conversation, but wanted to be able to use things like longer descriptions and Emoji and foreign languages in payment messaging and Osko supported that stuff out of the box,” says Anson Parker, Head of Product at Up Bank. 

Parker likens making a payment with Up to writing a message on WhatsApp rather than the traditional way payments are made. He also sees the fact that people who don't bank with Up will be receiving such payment messages from their Up-using friends as a major marketing tool.

The idea for Up came about after the founders developed the mobile internet banking platform for Bendigo and Adelaide Bank and started to speculate on what they could achieve if they built a bank from scratch, without the legacy systems and processes that hamper innovation.

“What we were looking to do was actually find an outlet where we could really build a sort of greenfields experience, a modern bank free from legacy that really just used the latest and greatest technology available,” says Parker.

Up wants only a slice of customers’ banking

It can identify merchants by the trading name their customers would be familiar with, rather than the company or trust name that often appears in bank statements. With the help of users who can submit the correct names for their purchases to help “teach” the app, Up is building up a database of business names. Statements also include the time of day of a purchase, which banks traditionally have not done.

They try to help users understand that their bank balance is in a sense not really their balance. While their account might have $1000 in it, they will have future expenses like rent and a phone bill coming out of it. The app identifies patterns of charges and lets people know when they’ve got charges coming up, which they can confirm or reject.

It is also working on a function to let people identify what they spent at events, such as an AFL match.

“We've always taken the view that let's not assume our customers understand how banking works because it is quite confusing and can take quite a long time to get your head around,” Parker says. “We have found that they appreciate a simpler interface.”

Up’s pitch isn’t for people to move all of their banking over to it – at least not initially – but only a part of it.
In part this is because they don’t yet offer a full suite of banking products such as mortgage or investment products, but also because the fast payment capabilities of Osko has made this possible. In the past, it was difficult to have accounts at two or more different banks because the overnight payment delay made shuffling money between them too impractical.

Becoming a financial hub

Parker sees a role for Up as an individual’s discretionary spending account. “So people can essentially be at the cash register for example, they go to use their Up and they realise they don’t actually have enough money for this purchase, they can essentially top it up in real time using Osko and pay for that purchase on Up,” he says.
The introduction of open banking in the next couple of years will provide an opportunity for Up to offer customers a “federated wallet”, which will show their consolidated financial position from accounts across several banks. 

“Maybe Up can be that smart hub where we do your transactional banking and we actually make those other things work better,” Parker says. “For example, in Up you can round up purchases into a savings account with an Up, maybe in the future to open banking you could actually round up your purchases on to your mortgage or onto your credit card.”

Building a bank with a full suite of traditional banking products would have taken years, so the founders hope to initially attract customers to the transaction account while they work to expand their offering. “Over time they'll hopefully fall in love with Up and the experience and also as our breadth increases over time, there'll be more reasons for them to move their banking to us,” Parker says.

Thus far, the bank has proved popular, with 100,000 customers signing up in the first nine months, rather than two years as Up had expected.

This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY. Published by BPAY Pty Ltd.  BPAY payment products are offered by over 150 Financial Institutions. Contact your Financial Institution to see if it offers BPAY payment products and to get the terms and conditions. This is general advice – before using BPAY payment products please review the terms and conditions and consider whether BPAY payment products are appropriate for your personal circumstances.

Subscribe to the newsletter

Stay up-to-date about the changes in the dynamic payments industry, both in Australia and overseas.

Success! Thank you for subscribing.