PayGlobal piggybacks on ANZ

By ADAM GIFFORD

Christchurch payroll software developer PayGlobal has built itself a bank by piggybacking on the ANZ.

Chief executive Donald Hastie said employees from Australian companies that used Payglobal's payroll and human resources software were starting to sign up for the PayGlobal Financial Services Option Plus accounts.

The company is talking to the ANZ about rolling out the service in New Zealand this year.

PayGlobal has a ready-made market among the almost 300,000 people paid through its software and familiar with its portal.

"I don't have customer acquisition costs, so my customers don't need to pay for acquisition costs, they don't need to pay for advertising because I am not going to advertise," Hastie said. "We will have the coolest retail bank in Australasia - no fees and interest paid on all deposits with no minimum monthly balance."

PayGlobal has created an interface from its employee self-service module to ANZ's internet banking system using XML and SOAP protocols.

This means customers will work in the PayGlobal environment, whether through the internet portal or through their corporate intranet, but the transactions will be handled by ANZ's back end systems.

PayGlobal is buying the ANZ banking services at wholesale rates.

It pays the fees from the difference between what it can earn from deposits and what it pays out in interest - which starts at 0.5 per cent for monthly balances under $5000 and goes up to 4 per cent for balances that reach more than $15,000.

Customers get a debit card, an optional cheque book, internet banking, phone banking and can do two free transactions a month at ANZ branches.

"All we have to do is make sure we don't incur any costs in our delivery," Hastie said.

ANZ was not prepared to publicly discuss its deal with PayGlobal Financial Services.

Consultant Matt Blomfield, who helped bring PayGlobal and the bank together, said the ANZ saw its traditional marketing was not translating into increased market share and it was open to a new approach.

"PayGlobal is the pilot for 'white label' banking, and the ANZ expects to gain market share by cannibalising the market," Blomfield said.

"It figures for every five customers who go to PayGlobal the ANZ will lose one but the other four will come from other banks."

He said PayGlobal was looking for other partnerships to offer goods and services through its portal.

The "white label" banking idea is being tried by other banks, St George Bank making its entry into the New Zealand market with its Superbank team-up with Foodstuffs supermarket group. Superbank is offering only a no-fees savings account paying 5.29 per cent interest, but promises transaction accounts before the end of the year.

A Massey University senior lecturer in banking, David Tripe, said banks were willing to outsource the customer interface. "Some people would say the banks are so bad at it, it would be hard for anyone else to take charge of the interface with the customers and do a worse job."

PayGlobal