APRA prepares to approve three new banks
There’s a prospect of there will be three new banks in the Australian market by Christmas, operating under unrestricted, full banking licences.
That these could be held by three start-ups less than a year old – Volt Bank, 86400 and Judo Capital – shows just how fast the regulatory environment is changing under policy leadership of new Prime Minister Scott Morrison.
As Treasurer, he championed the need for more competition to pressure incumbent banks to become more customer-centric.
Before Morrison’s 2017 budget paved the way for new entrants to enter the deposit market by streamlining application procedures, APRA had granted only one new banking licence to a local player in a decade: Tyro, the payments disrupter that’s now expanding into business banking.
But now, the green shoots of a local “neobank” or “challenger bank” scene are sprouting, after a flurry of Millennial-focused new banking brands have appeared in Britain over recent years, including Revolut, Monzo, Starling and Atom.
Getting to scale isn’t going to be easy: banking involves a long, tough path to profitability. Taking deposits and providing transaction cards isn’t a money-spinner; real banking profits come from selling loans.
All three of the Australian start-up banks understand this: Volt and 86400, which will be initially focused on retail banking, are preparing to build home and personal loan offerings on the top of their deposit funding, while Judo will do business lending.
To read more, please click on the link below…
