Small and mighty: Meet the challenger banks nipping at the heels of the big four

Small and mighty: Meet the challenger banks nipping at the heels of the big four

A slew of challenger banks are poised to burst onto the Australian finance scene, in a bid to take on the big four, and change the way that Aussies think about banking.

Typically offering cloud-based banking services without a bricks-and-mortar branch in sight, these so-called ‘neobanks’ say they will provide a more personal banking service, designed to be more in line with what modern bank customers want, whether that’s near real-time updates on spending and saving, or personalised lending for small business customers.

Who are the challengers?

They’re all still awaiting banking licences, but there are four major challenger banks coming out of Australia, at varying stages of readiness. They all claim to be the first, or the best, at something.

Free from the cumbersome legacy technology, policies and bureaucracy of big institutional banks, they’re seeking to offer more personalised customer service and help customers to more easily keep track of their cash, albeit without any actual interaction.


Xinja proclaims itself as Australia’s first neobank. Last year, the company announced it had been in discussions with the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investments Commission, and while it has rolled out its pre-paid credit card and app, it’s still waiting on a full banking licence.

In May 2017, the Sydney-based startup raised $2 million in first-round funding to launch its pre-paid debit card, ahead of its fully digital mobile bank. It also raised $2.4 million in March this year, becoming the first startup to raise capital through equity crowdfunding.

Xinja is also gearing up to undertake a Series C funding round, tipped to raise between $15 and $20 million. Earlier this month, founder and chief executive Eric Wilson told The Australian the raise is conditional on the startup securing its banking licence, and should launch by next month.

86 400

Pitching itself as a genuine alternative to big banks, Sydney-based 86 400 (representing every second of every day) is fully backed by payments solution provider Cuscal, and is run by former chief of ANZ Japan, Robert Bell, and Cuscal chief information officer Brian Parker.

Founded two years ago, the startup intends to launch a beta product at the end of 2018, before releasing its product to the public in early 2019. Initially, the company plans to offer transactions and savings accounts, and add more services over time.

Judo Capital

The main challenger in the small business space is Melbourne-based Judo Capital, which is already a registered finance company and has an application underway for a full banking licence.

Established by former NAB executive Joseph Healey, Judo is striving to bring back the ‘craft’ of SME lending, by being more nimble than the big four banks and tailoring its strategy to clients’ needs.

Volt Bank

Finally, Volt Bank has become the first of the challenger banks to be named an authorised deposit-taking institution by APRA on May 7 this year, and it’s now working towards becoming a fully-licensed bank.

Again, it’s run by former banking execs, including former NAB and Barclays executive Steve Weston. According to a Business Insider report Volt Bank has raised $15.7 million in equity capital to date.


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Source: Small and mighty: Meet the challenger banks nipping at the heels of the big four – SmartCompany