A Quick look at three Neo Banks in Australia - 86 400, Xinja, Judo

  • Feb 07, 2020 AEDT
  • Team Kalkine
A Quick look at three Neo Banks in Australia - 86 400, Xinja, Judo

With the new investment growth in fintech firms, there are many neo banks that have sprung in Australia catering to different audiences. Neo banks are known for providing simpler ways to manage money via smartphone apps and platforms, which increases efficiency and reduce overhead costs.

It seems like, the current challenging environment for traditional banking has benefited the neo banks in gaining popularity among depositors. At a time, where Australia's “Big Four" banks are losing millions of dollars in savings deposits, Australian neobanks like Xinja, Judo, and 86 400 are bringing in their compelling accounts with competitive interest rates to pull in more depositors.

86 400

Emerging Neo Bank - 86 400, has done its research to understand the more about Aussie depositors.

Major Research Highlights:

  • Australians are missing out on around $240 each year in interest on savings balances with the big four, which have base rates as low as 0.05%
  • half of big four customers meanwhile are being charged an average of $87 in account keeping fees, overdrawn fees and dishonour fees
  • 90% of savings balances with the neobank are earning the bonus rate - achieved by depositing $1,000 per month in either account

The new saving product of 86 400, is offering Australian the opportunity to get more from their money with market-leading interest rates, and flexibility on how they arrange their saving and it is also helping them to earn the bonus interest rate each month.

As per the Chief Executive Officer of 86 400, instead of acting in the interest of customers, the leading 4 banks of Australia are currently slugging their customers with high fees and low interest on their savings. The bank recently released a new feature which allows customers to create multiple accounts without sacrificing their interest earnings.

Xinja

Recently, Xinja, one of Australia’s newest digital bank, crossed $100 million in deposits within few weeks of launching its high-interest account- a great achievement for the bank. It is to be noted that, the interest for these accounts is calculated daily and paid monthly which means that if a depositor get interest on the full value of every cent that’s in his/her account every day.

Xinja Bank Highlights

  • January 2020 Xinja Bank launches high interest rate Stash account offering 2.25% interest
  • Xinja builds its bank using the best new technology, appointing bank futurist Brett King and former Tesla engineer Thomas Vikstrom to advise the Board
  • September 2019 APRA grants Xinja a full bank licence, Xinja opens first bank accounts
  • Xinja raises funds via two record-breaking equity crowdfunding offers, January 2018 and January 2019, and a further A$60 million from investors in Australia and around the world

Xinja recently launched new marketing campaign under which it encourages people to ‘ditch dad banking’, a cheeky nudge to get with the times.

Forward Plan of Xinja

In FY2020, the bank has lined up couple of secret squirrel products so that it can change what people expect from their bank and challenge how much customers should have to pay to access clever wealth-building and money-saving tools, and in addition to this, the company also intends to form a crack force of data technologists to figure out how to use its data to wow its customers.

Judo Bank

On 24 April 2019 Judo Bank Pty Ltd was granted an authority to carry on a banking business in Australia by the Australian Prudential Regulation Authority (APRA). Judo Capital Holdings Limited was granted an authority to be a NOHC (Non-Operating Holding Company) by APRA. There were no other significant changes in the group's state of affairs that occurred during the financial year, other than those referred to elsewhere in this report.

With an intention to bring back the craft of relationship banking to transform banking for Australia’s small and medium-sized businesses, the bank expects to have at least $3 billion by the end of January 2021, which would be a good base to grow the business.

Like the sport Judo, the strategy of Judo Bank is also to avoid forms of competition, such as head to head struggles, that naturally favour the large and the strong. Instead, it relies on speed and creativity to craft it strategies.

The principal activity of the Group is the operation of a banking business, specifically focused on providing finance to small to medium sized companies (SME's) in Australia, offering the following key products:

  • Asset Finance
  • Business Loans
  • Lines of Credit
  • Residential Mortgages (for business loan customers)

Till now, the Group has funded its lending activity through a variety of sources that optimise its cost of funds and liquidity preferences including equity, senior debt, securitisation programmes and later in the year wholesale deposits. The Group will continue to diversify its sources of funding, in accordance with its funding plan, and has launched Retail deposits to the public in September 2019.


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