A new breed of start-up banks is entering the market. The likes of 86 400, Volt, Judo and Xinja are promising that their technology will lower costs for customers and give them tools for managing their finances more effectively.
The Australian Prudential Regulation Authority granted a full authorised deposit-taking institution (ADI) licence to neobank 86 400 last week, allowing it to accept an unlimited number of deposits when it launches its transaction and savings accounts later in the year.
Chief executive of 86 400, Robert Bell says: “This has been an incredibly thorough process and we’ve had every element of our business stress-tested to confirm that we are as robust, secure and safe as any bricks-and-mortar bank. The only thing remaining is to bring 86 400 to market, which we’re now very close to doing.”
Unlike traditional banks, neobanks are digital banks that usually operate wholly from a smartphone app or online, and don’t have any physical branches. Consumers pay little or no fees, have better accessibility and greater insights into budgeting.
Chair of 86 400, Anthony Thomson says: “From early on, we’ve been incredibly confident that what we’re building will offer Australians a smarter alternative to the Big Four banks.”
86 400, its name referring to the number of seconds in a day, utilises the customer’s own data and analytics to give them an understanding of their spending and saving habits and offer real banking solutions to assist with their finances.
Thomson says: “With the latest technology, a simpler operating structure and streamlined systems and processes, we’ll be able to make savings that are passed on to our customers, and better returns for our investors. To get APRA’s approval today is testament to the incredible work of the 86 400 team over the past two years.
To date, neobanks Volt and Judo have entered the market and received full banking licenses. Xinja currently has a restricted banking licence and is expected to receive its full ADI licence later this year.
Judo is targeting small to medium businesses and offers business loans, equipment loans, a line of credit, finance lease and home loans and will soon offer term deposits and notice accounts.
Xinja currently offers a prepaid debit card that allows users to track spends through categories. It has launched home loans to a limited number of people and will be rolling this out by the beginning out next year. Once it obtains its full banking licence it will release its transactions and saving accounts.
Volt has had its ADI licence for six months but it is yet to release any product or give an indication of what will be on offer other than a transaction account.
Like most of the major banks, 86 400 will feature real-time payments through Osko and access to digital payment systems Apple Pay, Google PayTM, Samsung Pay, as well as FitBit Pay and Garmin Pay along with a Visa debit card, ATM access and customer support.
86 400 is backed by payment and banking services provider Cuscal and Morgan Stanley has begun the bank’s external capital raising. The app will be coming soon to the App Store and Google Play.