Neobanks to grab open banking opportunities

Earlier this month, Xinja was granted a restricted authorised deposit-taking institution (RADI) licence by the Australian Prudential Regulation Authority.

GlobalData head of content for Asia-Pacific financial services Andrew Haslip said Australia is finally starting to see neobanks enter the market after APRA established the RADI category as an option for new entrants to the banking market.

“Though not all neobanks are opting for this status, RADIs are proving attractive enough to potential new banks. Backed by Cuscal and aiming to release accounts into the market in 2019, another Australian banking start-up 86 400 is pursuing a full ADI licence, for example,” Mr Haslip said.

According to GlobalData, achieving bank status ahead of the roll out of the first stage of open banking in July 2019 is critical for neobanks looking to make a big splash in the market, as that is when major banks are expected to make data on their cards and accounts available via application programming interfaces (API).

Mr Haslip noted that as most of the neobanks are initially focusing on the payments, budgeting and money management aspects of the banking relationship, these open APIs represent a big opportunity to easily gain access to data.

He said it is difficult for a start-up to be insightful when it lacks years of customer activity for AIs to analyse – and this is a major business challenge if personalised money management and insights are core to the offering.

“This will immediately make neobanks’ offerings more useful and offer an opportunity against established incumbents, which currently hold all the data,” Mr Haslip said.

“Most neobanks will therefore want to get up and running to take advantage of open banking as soon as possible, even if, as RADIs, they are restricted in offering accounts to the general public. Stay tuned in 2019 for more RADI and product launches among neobanks.”

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].