Big four banks consider creating their own digital brands

Each of the big four banks have considered launching new digital bank brands to attract new, young, digital-savvy customers. Apart from National Australia Bank’s UBank, the plans have been non-starters, getting lost among layers of bureaucracy, management changes and restrictions on new investment.

But the pending launch of Volt Bank, which on Tuesday received an unrestricted banking licence from the prudential regulator, and with Up already in the market, the majors might be forced to reconsider whether creating entirely new standalone digital brands, or partnering with emerging players in the emerging “neobank” space, is needed to stay on the front foot in the fast-moving world of digital banking.

NAB is increasing investment in UBank, but it’s not considered a neobank, a term that’s being used to describe standalone, start-up banks built from the ground up on new technology platforms designed for use over smartphones. (UBank runs on NAB legacy technology systems and its management reports into the NAB mothership.)

In the UK, some of the major banks are moving aggressively to counter the disruptive threat from the likes of Monzo and Revolut, new brands that are starting to attract a material number of customers. (The five largest neobanks in the UK have 2.5 million customers, quadrupling over the last year.)

Royal Bank of Scotland is creating a new digital banking brand, to be known as Bo, that will be run independently of RBS. Management is keen to migrate 1 million NatWest customers on to the new platform.

It’s earlier days in Australia. But Up, which is operating under Bendigo and Adelaide Bank’s licence, is acquiring 1000 new customers each week to its new savings account, which is offering an introductory interest rate of 2.75 per cent. About 22,000 accounts have been opened since its October launch.

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