Neobank granted restricted bank licence

by Rebecca Pike19 Dec 2018

A digital neobank has been granted its restricted banking licence from APRA and said it is now “ready to revolutionise the way Australians think about banking”.

Xinja, which will now also be known as Xinja Bank, is designed entirely for mobile.

The Australian Prudential Regulation Authority (APRA) granted the group a restricted authorised deposit-taking institution licence (RADI) which will allow Xinja to conduct restricted banking business.

The bank said it is already challenging Australia’s major banks by showing people how innovation can make banking work in their interests.

According to co-founder and chief executive Eric Wilson, “Xinja is all about making banking easy, frictionless and even fun so that people can make better, faster money decisions without the angst.”

He added, "We are super excited and this announcement confirms our belief that Xinja represents the new way of banking in Australia. It brings us one step closer to fulfilling our purpose, which is to help people make more out of their money.

“We are very proud that Xinja’s owners include not only local and overseas professional investors but our staff and thousands of cardholders who have invested, as part of our equity crowdfunding, and want to join with us to revolutionise banking.”

Xinja chair Lindley Edwards said Australians deserve better banking. 

She added, “Xinja will bring greater competition to the market, which has been stagnant for too long when it comes to looking after the interests of ordinary Australians.

“We have built Xinja from the ground up, which means we have listened to people who want to bank with us, and used their feedback to help us build a better bank.”

More than 22,000 people have already signed up for Xinja, which has an app and prepaid card that also serves as a no-fee travel card in use in more than 70 countries.

Xinja already has an Australian Credit Licence, which allows it to offer home loans. In November, it announced that, with its partner SAP, it has already stood up its core banking system, which was achieved in record time.

“We believe old-style banking is about to face serious challenges,” Edwards said.

“Xinja has been asking ‘what’s the very best we can do?’ We have been looking to other innovators and disruptors around the world to bring the best to our banking.”

Xinja has so far raised over $A17 million in Series A and Series B capital raisings, including $2.7 million from 1,200 retail investors in Australia's first and most successful equity crowdfund. It has announced it will launch a second equity crowdfunding in January 2019.

It has a target range of $10 million to $20 million for its current third funding round.

The restricted licence means Xinja can hold up to $2 million in deposits of less than $250,000 each. APRA also imposes strict rules around Xinja’s tier one capital, assets and liabilities, and the assets it holds on its balance sheet.