Xinja wins regulatory upgrade: Full licence for upstart ‘neobank’

Launches transaction accounts; savings accounts and lending products coming soon

Xinja Bank has been granted a full banking licence, the Australian Prudential Regulation Authority (APRA) announced today.

The bank has launched transaction accounts, which come with a Xinja Debit Mastercard, and plans to launch savings (‘Stash’) accounts soon. Xinja said intends to launch lending products in the first quarter of 2020.

The cloud-based ‘neobank’ in December 2018 was originally licensed by APRA as a restricted authorised deposit-taking institution.

The ‘restricted ADI’ category was introduced by APRA last year, allowing an aspiring bank to conduct a range of activities for up to two years while it builds up its capabilities. It imposes an aggregate deposit limit of $2 million, and a deposit limit of $250,000 per individual account-holder.

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

“We are 100 per cent digital; we want people to have a real alternative to the incumbent banks, to have real choice to be able to bank with a bank that really looks after them.”

Xinja originally launched in May 2017, with the company raising $5 million through two equity crowdfunding campaigns in 2018 and earlier this year, as well as $45 million through private and institutional investors.

The bank said it has so far signed up 28,000 people to its services, including distributing 12,000 prepaid cards. Xinja has a headcount of 65.

Xinja said that its lack of legacy systems gives it an advantage over its competitors.

“We don’t have bricks and mortar branches or old technology that we are constantly patching to meet the needs of customers,” Wilson said. “Our costs will be significantly lower than traditional banks.

“But it’s not just about technology: our purpose is to help people make more out of their money and get out of debt faster. And if we stick to that, we will succeed. We’ll use technology and data to prompt money mindfulness; nudging people toward better every day behaviour that can improve their finances.”

Xinja is not alone in its digital banking ambitions for the Australian market. Bendigo and Adelaide Bank-backed Up has more than 100,000 customers. Cuscal’s 86 400 in July 2019 received its full banking licence from APRA. In May 2018, Volt was licensed as a restricted ADI.