NAB set to acquire neobank 86 400

by Madison Utley01 Feb 2021

NAB has entered into proceedings to acquire 100% of the shares in 86 400 in a bid to complement the customer base and brand of its own digital bank UBank with the neobank’s experience and technology platform.

According to NAB chief operating officer Les Matheson, the bringing together of UBank and 86 400 is consistent with NAB’s long-term strategy and will enable the major to develop a leading digital bank that can “attract and retain customers at scale and pace”.

“The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers,” Matheson said. 

Having recently participated in 86 400’s Series B capital raise, NAB already holds an approximate 18.3% shareholding in the group; the major now proposes to acquire the remaining shares by way of a scheme of arrangement, with total consideration expected to be up to approximately $220m. The transaction, which is subject to approval by shareholders and regulators, would see the 120-person 86 400 team become part of the NAB group.

Upon news of the acquisition breaking, UBank CEO Philippa Watson emphasised the group’s 12 years spent as a “pioneering digital bank”, with its hard work resulting in now boasting over 600,000 customers.

“Combining with 86 400 will bring together UBank’s established business and 86 400’s experience and technology platform to meet the changing needs of our customers. We are looking forward to having the 86 400 team join us to deliver the next generation of simple, fast and mobile banking solutions,” Watson said.

As of 15 January 2021, 86 400 had more than 85,000 customers, $375m of deposits, $270m in approved residential mortgages and 2,500 accredited brokers. December 2020 was the group’s largest ever month for home loan applications, with more than $270m in home loans settled or unconditionally approved.

86 400 CEO Robert Bell believes both the neobank and its customers will benefit from NAB’s capital and balance sheet strength and investment spend.

“This will significantly fast-track our growth, propelling our business, customer numbers and balance sheet to a position which would’ve otherwise taken five years,” he said.

The purchase has been welcomed by other players in the space, with some expressing confidence it bodes well for fintech as a whole.

“This acquisition is fantastic news for the fintech ecosystem and should be celebrated by industry. We congratulate CEO Robert Bell on what is a fantastic milestone for 86 400,” said Rebecca Schot-Guppy, CEO of FinTech Australia.

“While there is ongoing debate around competition in financial services, which we support, acquisitions and exits build investor confidence in our ecosystem and in turn allow for further and broader industry funding.

“This is yet another step towards our fintech industry maturing, which as it grows will deliver more choice and competition for consumers.”