New bank in town: Xinja the latest ‘neobank’ to get its full licence
Xinja, the latest “neobank” to be given a full banking licence in Australia, is looking to raise more than $50 million from big investors as part of its plan to disrupt the lucrative retail banking sector. In a key milestone that allows the bank to take deposits from the public, Xinja was on Monday granted an unrestricted licence from the Australian Prudential Regulation Authority (APRA).
Co-founder of the bank, Eric Wilson, on Monday said it was launching transaction accounts on Monday, and would soon offer savings accounts, with loans to come in the first quarter of 2020.
Xinja has so far raised about $50 million in capital, and on Monday it kicked off a Series D capital raising with the aim of adding about $50 million or more, including from institutional investors. Mr Wilson said that over the next three to four years, it was looking to raise about $150 million in total.
“We are 100 per cent digital; we want people to have a real alternative to the incumbent banks, to have real choice to be able to bank with a bank that really looks after them,” said Mr Wilson, who used to work for the National Australia Bank.
Xinja is a start-up bank that does not have branches. It has been distributing pre-paid cards in the market since 2018, and it will now seek to move these customers to transaction accounts.
Other neobanks that have been given a licence from APRA this year include include 86 400, Volt Bank, and Judo Bank. Given the amount of capital required, some observers are sceptical about the challenges neobanks will face in taking on the big four.
Mr Wilson pointed to various digital-focused products it was planning to roll out, including a home loan that he said could be approved within seven minutes, which it planned to launch by about April next year. While he said some loans would be more complex than this, he said the quick approval time of seven minutes would be relevant to the “majority” of its customers.
The founders of Xinja currently own 48 per cent of the lender, though this shareholding will be diluted as the bank sets about raising more capital.