Cashed-up Novatti builds on neobank foundation with revenues rolling

Cashed-up Novatti builds on neobank foundation with revenues rolling

Amid the collapse of neobank Xinja, fintech and digital payments company Novatti Group (ASX: NOV) still has its sights on the launch of their own having quietly set their foundations with revenue-generating products while awaiting a banking license.

Originally submitting their banking licence application to the Australian Prudential Regulation Authority (APRA) in November 2019, Novatti was informed in May 2020 that APRA would not be issuing any new licenses during the pandemic, pushing the approval process back a further 12 months.

During this time, Xinja which had already secured its licence undertook a monumental marketing campaign of its neobank savings accounts that offered interest rates of 2.25% on deposits. Without loan products or other means of revenues and as an entirely new business, the neobank received a $433 million cash injection via foreign investment in March 2020 but this still wasn’t enough to prevent the Company’s collapse announced on Tuesday as Xinja commenced the process of returning all deposited funds under the watchful eyes of APRA.

Despite the collapse of Xinja, neobanks in Australia are still expected to be popular in Australia with it reported earlier in the week that neobank Judo is expected to finalise a funding round valuing it at $1.65 billion. These reports also suggest Judo became profitable in August this year.

While awaiting the issuing of their own license, Novatti has been putting together a serious network of Tier One partners in the fintech industry which have supported the $11.86m revenue generated by Novatti in FY20. This has been driven by their licence to issue Visa cards as a Visa Principal Issuer where they were selected by international payments company Marqeta as their Australian partners earlier in the year. Marqeta themselves have since been speculated to be eyeing a $10 billion IPO with their Australian operations to be assisted by Novatti.

Other major partnerships confirmed by Novatti over the past 12 months include Google Pay, Samsung Pay, Alipay, Decta and blockchain payments network facilitator Ripple.

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Source: Cashed-up Novatti builds on neobank foundation with revenues rolling – The Sentiment