The Commonwealth Bank of Australia (ASX: CBA) backed venture-building outfit, x15ventures initiated its first investment in Payble, a subsidiary of Identitii Ltd (ASX: ID8).
What does this mean for the CBA share price?
First investment by x15ventures
x15ventures is funded by CBA and designed to provide capital to the next generation of businesses that are capable of reshaping banking. It was set up 14 months ago and this investment is the first minority equity stake in an existing business.
CBA has invested $1 million in Payble, providing it with a 27% equity ownership in the external start-up.
Payble plans on using the new open banking regime to assist billers to reschedule payments to reduce the costs of collecting from late customers.
According to the Australian Financial Review, Payble will be provided access to banking data, enabling it to examine bank account data, including income and expense.
This data will be key to arranging tailored customer repayment plans instead of using formal debt collectors.
Why is CBA excited?
Banks constantly strive to provide the best solutions to their consumers. This is how banks compete for market share.
This investment will potentially provide cost savings to its commercial clients.
The Payble CEO, Elliott Donazzan noted more than 15% of the annual total of 500 million recurring bills are either paid late or not paid at all. Feedback from billers advise every late payment costs money via making calls to customers or issuing letters to chase payments.
Elliott Donazzan says Payble will be able to reduce this cost to less than $1 for each late bill by rescheduling a payment before it becomes overdue.
Should CBA investors get excited?
Innovate or be left behind, this is the new mantra that other banks have adopted to remain competitive.
The new open banking regime has provided enormous opportunities for banks to innovate and develop new solutions for customers.
If I was an investor in CBA, I would find it encouraging to see the bank deploying capital in areas that could provide a competitive edge.
At Rask, we focus on companies that can build a competitive advantage, you can find out more here.
