Despite continuing market volatility in response to the coronavirus pandemic, digital-only challenger bank 86 400 pulled off an impressive $34 million capital raising effort last month, completing its $90 million Series A equity funding round.
It is also the first time the neobank has accepted capital from investors beyond its parent, payments giant Cuscal.
The neobank’s capital raising efforts were led by investment bank Morgan Stanley, with capital sourced from a local superannuation fund, fund managers, high net-worth individuals and family offices.
The new funds will contribute to growing the bank’s now $20 million mortgage book to an anticipated $2 billion by end of 2021. The bank also announced ambitious targets to triple transactions and savings accounts from $170,000 to $500,000 in 12 months.
“The funding announced today means we can keep our foot firmly on the accelerator, continuing to build out both sides of the ledger and help even more Australians take control of their money,” 86 400 chief executive, Robert Bell said.
Besides mortgage book growth, the new funds will go in some part to accelerating the neo’s product and features development, which includes prospects of upgrading the digital-only bank’s in-app chat functions, push notification enhancements, the addition of PayID functionality, and Open Banking compliance.
Proclaiming itself “Australia’s most advanced neobank”, 86 400 said its breakneck speed-to-market surpasses that of any other Australian bank, with the digital-only challenger reportedly releasing seven products in six months since obtaining its ADI license last September. By end of 2020, the bank expects to release another three products.
On the mortgage front, since the November launch of broker-focused digital home loan product ’86 400 Own’ – considered a first among Australian banks – the bank’s broker network has grown, owing to the product’s rapid mortgage approval process and end-to-end digital functionality.
“The entire process can be managed electronically, from VOI [verification of identity] done via a mobile phone to expense and income data collection and signing forms online,” said George Sribinovski, national manager, broker distribution for 86 400.
Just this week, the bank partnered with nationwide broker group Buyers Choice, adding to its broker panel, which includes Vow Financial and SFG.
“86 400’s smarter approach to mortgages transforms the process of buying a home for Australians… provid[ing] our brokers and home buyers an entirely digital experience through these unprecedented times,” said Brett Mansfield, director of Buyers Choice, commending the bank’s digital offering in light of recent social distancing restrictions enacted by governments across Australia.
86 400’s capital raising comes as fellow neobank Xinja received $433 million from Dubai-based World Investments, and Judo Bank secured a $500 million investment from the Australian Office of Financial Management (AOFM).