After a nearly two-year wait, digital-only lender, Alex Bank, has announced it has secured its restricted authorised deposit-taking institution (rADI) licence from APRA, with its eyes on a quick move to unrestricted status.

Alex appears keen to fast-track its route to an unrestricted banking licence, which it said it would be qualified for by the end of this year.

Once granted its full authorised deposit-taking institution (ADI) licence, the neo-lender (and now neobank) revealed it would move to promptly add “term deposits, a line of credit, and a transactional offering” to its already well-established personal loans service, which are currently offered up to $30,000.

Alex said that deposits from customers would “fund loans and credit for other customers, while interest generated from borrowers will fund the interest paid to savers”.

The newly minted rADI was no doubt conscious to avoid the pitfalls that befell fellow neobank Xinja, which voluntarily handed back its ADI to APRA last year, due in large part to the fact it lacked a lending product that could draw in sufficient capital.

Alex said aims to capture “approximately three per cent of the prime consumer lending market in Australia” before it scales and builds out products that can “improve the consumer credit and banking experience for Australians”.

The company reportedly applied for its RADI back in August 2019, with its application caught in the cross-winds of the initial Covid-19 wave, forcing APRA to put a temporary pause on its licencing accreditation processes. The prudential regulator recommenced licencing in March this year.

The rADI offers an alternative pathway for emerging financial organisations to gain a full banking licence – effectively, it serves as an intermediary step allowing organisations “to conduct a limited range of business activities for two years” while building out the “capabilities and resources” (and indeed capital requirements) to become a fully fledged authorised ADI.

Alex attributes its low-fee structure to its lean, “100 per cent” digital model, including its ready use of AI processes, which it says has enabled it to slash overheads and ultimately reduce customer fees.

“One of Alex’s core principles is to make banking fairer,” said Alex chief executive Simon Beitz in a statement. “This includes giving customers the fairest interest rate possible across both savings and lending products, without hidden fees and nasty surprises.”

“We do this by using technology and processes that are fast and minimise friction and unnecessary risk. We believe we can provide some of the best products and interest rates in the market, without compromising customer service expectations, while still delivering a fair result to investors.”

Alex’s core system is powered by the cloud-native BaaS developer Temenos. It notes that its front-end experience was “built in-house”.

The neobank said its AI-backed proprietary decisioning platform, Alex Intelligence, “creates efficiencies and powers automation and the bank’s simplified offerings”.

“The technology has already proved its worth, processing over 10,000 loan applications (which take just three minutes to fill out) in the past six months, with a customer commitment to provide a decision on their loan application within one business day.”

“Its 90+ day arrears rate currently sits at zero, demonstrating the prowess of Alex Intelligence in decisions and pricing credit risk.”

Having partnered with identity verification GreenID last year, the company said it has also added on “a biometric verification process embedded in its application”.

“Identity verification is done automatically and instantly through a photo capture of the applicant’s ID and a selfie of the customer. AI technology is then used to ensure they are the same person, reducing the risk of stolen identity and fraud.”

Co-founded by Beitz and Craig Fenwick in 2018, and originally known as Bene, the bank has already approved more than $8 million in personal loans.

Beitz and Fenwick are fellow Suncorp alumni, both serving as innovation leaders within the financial services giant.

Beitz is also co-founder of payments giant EML.

Among Alex’s board includes ex-Judo co-founder Alex Twigg.