Digital-only Xinja lands full banking licence

Xinja Bank has cleared APRA’s final hurdle in its year-long journey to a full banking licence, with the prudential regulator granting the digital-only bank approval to operate as an unrestricted deposit-taking institution.
 

The neobank, which was granted its original ‘RADI’, or Restricted Authorised Deposit-taking Institution, licence (an interim phase that gives new banking entrants in Australia a direct pathway to a full ADI licence) by APRA in December 2018, can now shed the prudential regulator's restriction, allowing the it to operate as a fully-fledged banking entity.

Xinja becomes the third consumer-focused neobank – a digital-only institution – in Australia to be granted a full ADI following the ascension of Volt Bank and the Cuscal-backed 86 400 earlier this year.

“It’s enormously exciting that Australians have a new, independent bank," said Xinja chief executive and founder, Eric Wilson. “It’s time Australia's very old banking model was disrupted.”

Wilson praised the neobank’s own legacy-free backend and digital-online front that he said offers the neo “a massive advantage over both traditional and Australian digital banks”.

“We don’t have bricks and mortar branches or old technology that we are constantly patching to meet the needs of customers", resulting in what he stressed would be “significantly lower [costs] than traditional banks.”

Leveraging SAP’s API-driven HANA platform, part of the neobank’s wider SAP Cloud core banking system adopted in 2018, Xinja hopes to add further active prompts and “money mindfulness” features to support customers’ financial wellbeing and improved outcomes – a principal operating objective.

“We are going to see hyper-personalised, data-driven messaging, products and services that help people achieve their financial goals,” Wilson said.

“I know we will make less money from our customers than traditional banks. We are fine with that.

"Our key performance indicators at Xinja Bank include ensuring our customers do better. And that’s an important difference between us and our competitors.”

Better utilisation of customer data may also see the neo evolve its individual risk assessment capability, allowing Xinja to tailor lending rates for customers with "good financial behaviour", he said.

Alongside its newly minted ADI licence, Xinja has also announced the launch of its long-awaited customer transaction account, which – as is wont for a digital-only institution – is accessible only through the bank’s dedicated app. Xinja said it also expects to launch savings accounts “soon”, with plans to add lending products in the first quarter of 2020.