High demand spurs rapid fire funding at neobank

by Miklos Bolza24 Aug 2017
First coming onto the scene in June, neobank Xinja has reached its second round of funding in record time with high consumer demand accelerating the firm through its initial growth phases faster than predicted.

In an interview with Australian Broker, CEO Eric Wilson confirmed that APRA’s new bank licensing laws have helped push Xinja towards becoming a full service bank ahead of schedule and listed plans for how the bank would work with brokers to develop its home loan products.

While seeking an extra $15m in capital, Xinja has released the very first version of its app and will be sending out its first pre-paid debit cards in four to five weeks. It will then be releasing these in increasing numbers to registered customers over the next couple of months, Wilson said.

“We are way ahead of our plan with pre-registration targets. We’re talking thousands rather than hundreds. The level of interest has been enormous so we basically brought forwards our second funding round.”

While this had been planned between February and April next year, Xinja moved it forward to September and October in order to move quicker and get the products out at a faster rate.

In this way, the bank can be ready when the licence comes, Wilson said, predicting that Xinja will become an ADI in 2018.

To become a full service bank offering credit cards, debit cards, deposits and mortgages, staff numbers would have to grow from the current eight employees to 180 in three years, he added.

“The overseas experience is to get to a full service bank you end up with about 180 staff. Remember that this is 180 staff compared to 35,000 at NAB.”

Regarding mortgages, Wilson said Xinja was still very much interested in working with brokers towards future developments at the bank.

“We’re planning a series of design workshops with brokers to bring them in and ask about customers. We’re doing a customer-centric design process to make sure we understand the problems brokers face and things that their customers come across.

“It’s not about how we design products, it’s how we solve their problems. We’re hoping to run a couple of sessions now and a few more as we get closer to the release date to make sure we design products that help solve problems for brokers.”

The government’s revised bank licensing regime has sped up Xinja’s progress even more, he added.

“What the regime changes mean is it’s going to be a lot easier than we initially imagined. We were all pretty comfortable about getting qualified under the old scheme and we’re really quite optimistic now it’s changed.”

Wilson said Xinja was in consultation with the regulators, putting submissions through to APRA, the Productivity Commission and the Treasury on key areas as required.

“We’ve talked about the restrictions, their impacts and the possibilities about moving forwards. We’re very much part of the conversation. We’re confident we can work with the new regime. The regulators are being treated like partners. It really is full steam ahead for us.”

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