Graeme Philipson
August 2, 2015

NAB's new $50m innovation fund

NAB's new $50m innovation fund

Nabbed: The National Australia Bank dips its toe in innovation waters

National Australia Bank has announced a $50 million investment fund called NAB Ventures to design and build new banking systems.

“The fund will enable us to access leading ideas and capabilities from around the world through entering into partnerships, alliances and making investments in innovative companies,” said NAB CEO Andrew Thorburn.

"This is an investment in our business designed to improve customer experience through innovative solutions, making banking easier, better and simpler.” He would say that – hard to see money being invested to make it harder, worse or more complex.

Australia’s Big Four banks are, along with Telstra and larger government departments, the largest users of IT in Australia. In the more than 50 years since commercial computing began in this country they have been at the forefront of the usage of technology – Australia was an early leader in ATMs, and major re-equipment programs at each of the big banks have been major drivers of the IT industry for many years.

Sometimes it all goes horribly wrong – of Westpac’s ambitious CS90s program twenty years ago, the less said the better. But mostly it has been successful. Australia’s Big Four are all in the top rank by market capitalisation globally (the latest ranking has CBA at number 10, Westpac at 13, ANZ at 19 and NAB at 21). They are all bigger than such international giants as UBS, BNP Paribas, or Barclays.

Thorburn said banking globally is undergoing a digital transformation, which is something of an understatement. “NAB Ventures will ensure NAB is able to embrace these changes to deliver innovative solutions for our customers.”

Banking, with its large customer base, high transaction volumes and extremely competitive environment is the industry computers were made for. It’s all about information – the money is just a way of keeping score.

The interesting thing about NAB’s announcement is that it has established a whole new division – NAB Ventures – to manage the investment.

He said the $50 million will be deployed over three years and will be invested both in Australia and overseas.

NAB Ventures will be part of NAB Labs, which Thorburn described as a “dedicated innovation capability designed to build a culture of innovation and customer-led design within NAB, and position the bank to be agile and adaptive to rapidly changing digital advancements.”

Thorburn said the fund will have two key objectives:

• Deliver accelerated access to new capability, technology, intellectual property, and businesses that could be deployed into NAB and its customer offering.
• Enhance NAB’s insight into and connection with emerging business models and technology. Key areas of focus include mobile platforms, payments and data and analytics.

He said NAB has also introduced a ‘Digital Acceleration Program’ to enable digital innovation to be developed and put in the hands of customers and bankers quickly.

“It’s critical that we are able to act quickly and be nimble in bringing digital innovation to market,” Thorburn said. “NAB Labs has a dedicated team and also draws on people from across the bank and external partners – as well as extensive customer engagement – to design, experiment and develop new products and capability.

“We want our team to be among the best global thinkers in the innovation space and give our customers access to the best innovative thought – and we recognise that won’t all necessarily come from inside NAB. NAB Ventures will further enable us to access the best minds and cutting edge ideas.”

Westpac established its own venture capital fund in February 2014, called Reinventure. Coincidentally, it also kicked off with $50 million. It has made a number of investments in Australian IT and financial services companies, including peer-to-peer lender SocietyOne.

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