The Commonwealth Bank of Australia is going hard on retail with the unveiling of AI-enabled ‘brand discovery and deals’ app Cheddar in the same week as the launch of in-app shopping platform Little Birdie.
But one retail and payments expert is questioning whether the big-four bank truly has merchants’ best interests at heart.
Launched out of CommBank’s venture scaling arm x15 Ventures, Cheddar is specifically targeting Gen Z and Gen Y consumers, using artificial intelligence and algorithms to serve them content from retailers that resonate.
A social-media style algorithm will serve users with content from merchants relevant to them, offering deals to an already highly-engaged user base.
Customers will be able to discover personalised deals and brand recommendations, and receive cashback rewards for shopping with those brands.
Cheddar managing director Helen Hey is a former marketing professional and e-commerce business owner herself.
“I was frustrated with how much money I was wasting acquiring customers who weren’t really engaging with my brand,” she said in a statement.
This platform is designed to be “native to how Gen Z approach life”, she added.
According to Hey, merchants using the app during a pilot saw increased engagement rates, compared to other marketing routes.
Cheddar has launched with more than 600 merchants on board, including the likes of Menulog, Culture Kings, Cotton On and Net-A-Porter.
CommBank’s retail “land grab”
This is just the latest addition to CommBank’s growing collection of shopping services.
This week, the bank also went live with Little Birdie, the so-called ‘homepage’ for online shopping co-founded by a team of Catch Group alumni, including Gabby and Hezi Leibovich.
CommBank invested $30 million into the startup in May.
The bank is also a 50% stakeholder in the Australian business of buy now, pay later startup Klarna, and has rolled out its own StepPay BNPL card, with an initial deal paying merchants a 4% commission over November and December.
Speaking to SmartCompany, managing director of Payment Services Brad Kelly says this is a “land grab” by CommBank.
“They’re going to weaponise shopping apps, open banking, consumer data right, their 13 million customers and their merchant base to create a walled garden.”
In order to make use of all these apps and services, merchants will have to have a CommBank account. And there will be costs associated.
“The merchant will pay,” Kelly warns.
He also notes that CommBank has been named as one of the Aussie banks most prone to outages, according to Reserve Bank data, raising yet another question.
“Can the network handle all this?”
With CommBank making a bold play in retail and shopping and the likes of Afterpay and Zip shifting to offer more financial services products, the lines between banking and retail are starting to blur.
If that’s where the fight is, Kelly says CommBank is on the winning side. It has the complex banking offerings that Money by Afterpay, for example, simply isn’t able to offer.
It’s also setting itself up to own the merchant data, the customer data, the shopping platforms, marketing, and even the NBN service merchants use, through its partnership with telco providers Telecom and Tangerine.
Overlay open banking and consumer data sharing and you have “a perfect storm”, Kelly says.
“It’s machiavellian genius,” he adds.
“People are not seeing this coming, and by people I mean Afterpay and Zip.”
This story originally appeared on SmartCompany, and has been republished with permission.
