Xinja – among the most high-profile Australian neobanks – became a formal bank this week, announcing its restricted authorised deposit-taking institution (RADI) status to the market.
Xinja joins Volt Bank as just the second RADI to come to market. Achieving bank status ahead of the rollout of Open Banking in July 2019 is critical for neobanks looking to make a big splash in the market. Additionally, GlobalData expects more to join the ranks of RADIs in the first half of 2019.
Go deeper with GlobalData
Australian neobanks
Australia is finally starting to see neobanks enter the market after APRA established the RADI category as an option for new entrants to the banking market.
Though not all neobanks are opting for this status – 86 400, backed by Cuscal and aiming to release accounts into the market in 2019, is pursuing a full ADI license – RADIs are proving attractive enough to potential new banks. The much lower capital requirement (A$5m [$3.5m] with A$3m liquid, rather than the traditional A$50m for a regular ADI license) is a particular draw for these start-ups.
What’s also a draw is the approaching rollout of the first stage of Open Banking. In July 2019, the major banks are expected to make data on their cards and accounts available via APIs.
As most of the neobanks are initially focusing on the payments, budgeting, and money management aspects of the banking relationship, these open APIs represent a big opportunity to easily gain access to data. This will immediately make neobanks’ offerings more useful and offer an opportunity against established incumbents, which currently hold all the data.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIt is difficult for a start-up to be insightful when it lacks years of customer activity for AIs to analyse – and this is a major business challenge if personalised money management and insights are core to the offering.
Most neobanks will therefore want to get up and running to take advantage of Open Banking as soon as possible, even if, as RADIs, they are restricted in offering accounts to the general public. Stay tuned in 2019 for more RADI launches and product consolidation among neobanks.
For more on other Australian neobanks such as Volt and 86 400, both of whom want to be operational in 2019, check the links.
