Why the Afterpay share price crossed $100 on Tuesday
We look at the key details and implications of the just-announced Afterpay-Westpac ‘collaboration agreement’.
Afterpay share price hits all-time highs off the back of Westpac agreement
In the opening minutes of trade on Tuesday, 20 October, the Afterpay (APT) share price hit a historic milestone, trading past $100 per share for the first time in the company’s history.
This came after the fintech announced a ‘collaboration agreement’ with Westpac Banking Corporation (WBC), under which Afterpay said it would soon be able to offer savings accounts and cash flow management tools to its 3.3 million strong domestic user-base.
As the market further digested this announcement, investors continued to bid the stock higher, with APT up 5.79% or $5.650 – to an all-time high of over $103 per share a little before 11AM.
Westpac’s stock, by comparison, was little changed in the first hour of trade.
Details of the agreement
Centrally, the collaboration agreement will be facilitated through Westpac’s soon-to-be rolled out digital bank-as-a-service (BAAS) platform – which will allow the bank to offer banking solutions and products to companies – with Afterpay set to be the first partner.
'Fintech innovation is changing banking in important ways and our new digital banking platform is part of our long-term strategy to support this trend and better respond to,’ Westpac’s CEO, Peter King said.
Westpac’s BAAS platform is set to go live in Q2 FY21.
Through Westpac’s BAAS platform, Afterpay’s domestic customers will be able to access a host of banking products and services, including a savings account.
Aligned with Afterpay's focus on simplicity and transparency, the company said these bank offerings would give its customers better control over their budgeting through a streamlined suite of digital services and tools. One key service arising from this agreement – the Afterpay savings account – can be used from everything from withdrawing cash, the payment of bills and even budgeting initiatives.
On a more granular level, Afterpay’s management noted that:
'Linking the new service to a user's existing Afterpay account will deliver further insight into how customers prefer to manage their finances, what their savings goals are, and how responsible spending behaviour can be further encouraged and rewarded.’
Speaking to the impact this collaboration may have on Afterpay’s bottom-line, it was noted that these new product offerings have the potential to create new revenue streams in the future.
Commenting on today’s announcement, Afterpay’s CEO Anthony Eisen said:
'We are excited to leverage the bank-as-a-service platform to provide customers with a different way to manage their finances, without relying on traditional banking services.’
‘We applaud Westpac's foresight in curating this innovative digital platform and welcome their desire to partner with Afterpay to meet the changing needs of a powerful next generation of customers,’ Mr Eisen finished.
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