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A big four bank is set to expand its working capital solutions offering after agreeing to acquire an invoice lending platform.
The Commonwealth Bank of Australia (CBA) has announced that its venture-scaling arm x15ventures has entered an agreement to acquire cloud-based invoice lending platform Waddle from Xero.
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The move, part of the major bank’s increasing growth in the business lending space, aims to accelerate the bank’s ambition to provide leading working capital solutions for Australian businesses.
Completion of the transaction is expected to occur “reasonably soon”, according to CBA, after satisfaction of customary conditions.
While the major bank already had an existing partnership with Waddle through its Stream Working Capital product, the acquisition would bring the technology in-house and enable further growth.
CBA noted that the move would help more business customers unlock cash tied up in unpaid invoices by harnessing the digital cash flow solution, which connects to their accounting software (Xero, MYOB and QuickBooks, etc) while “continuing to benefit from the first-class automation and flexibility the Waddle platform is known for”.
CBA group executive business banking Mike Vacy-Lyle said the acquisition further supports the bank’s focus on simplifying finance and providing digital experiences to its customers.
“Access to working capital is vital for many businesses and Stream Working Capital offers greater flexibility, simplicity and faster access to cash flow,” Mr Vacy-Lyle said.
“We launched Stream Working Capital as a digital solution to use outstanding invoices as loan security, with the loan size reducing as invoices are paid. This digital end-to-end solution was a first for a major Australian bank.
“Through acquiring the Waddle platform, we can continue to provide the best integrated digital working capital solution in the market and support more of our customers with faster funding assessments and approvals. This is a positive step in helping more Australian businesses to maximise cash flow and drive business growth.”
Toby Norton-Smith, managing director of x15ventures, added: “This will bring together a phenomenal product and distribution arm in Stream Working Capital, with the secure technology and operating environment of x15ventures, giving Waddle the flexibility and freedom to continue innovating at pace.
“We set up x15ventures so that digital native businesses can operate how they’re used to – both culturally and technically – while also getting access to the assets and reach of one of Australia’s leading banks. We look forward to welcoming Waddle to x15ventures and helping them continue to realise their ambitions to scale and support more small businesses.”
A Xero spokesperson said: "One of the biggest challenges for small businesses is managing cash flow and accessing capital. Xero remains committed to our broader small business platform strategy in order to support small businesses across their many needs."
The Waddle acquisition comes as the major bank focuses on building its business lending presence amid softening mortgage growth.
According to the major bank’s financial year 2023 results, the banking group had helped 150,000 Australians buy a new home and lent $35 billion to help small businesses grow.
Its business lending grew by 11.4 per cent ($14.5 billion) in the 12 months to June 2023 or 1.4 times system.
In fact, the bank has grown its business banking deposit balances by 43 per cent since June 2020 to $68 billion. This followed the porting over of business banking to CBA from Bankwest, which started last year.
According to CBA, approximately 25 per cent of businesses use CBA as their main financial institution, with National Australia Bank (NAB) being the only other major bank to exceed its market share for business banking.
[Related: CBA launches SME invoice finance product]
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