New digital bank Alex secures banking licence

New digital bank Alex secures banking licence

Australia’s newest digital bank, Alex, has today been granted a restricted banking licence from the Australian Prudential Regulation Authority (APRA). Founded in 2018, the bank has already approved more than $8 million in personal loans and received six major awards for its unsecured personal loan from Finder, Canstar, Mozo, RateCity and Money Magazine, which this month named it ‘Non-Bank – Personal Lender of the Year’ in 2021.

It aims to secure approximately three per cent of the prime consumer lending market in Australia by targeting credit consumers first and foremost with fast, competitive and no fuss loans. It will then scale and build out key products that aim to improve the consumer credit and banking experience for Australians, making it faster, simpler and fairer.

Alex CEO Simon Beitz said the strength of its model was its lending and deposit products that would drive growth and profitability. Following the restricted ADI period, this will see deposits from customers fund loans and credit for other customers, while interest generated from borrowers will fund the interest paid to savers.

According to Beitz it’s a strategy that has fuelled much of the rapid growth of other lending-led institutions internationally.

“Being a bank is a privileged position in Australia and that’s why we’re building Alex from the ground up, based on smart banking fundamentals and a focus on lending to high quality banking customers,” he said.

“By solving Australians’ day-to-day credit needs, we’re helping customers get more of what they want in their life and creating a bank based on what people have told us is important: fast, simple, fair and human banking products and services.”

To date, Alex has raised more than $35 million from many of Australia’s largest and wealthiest private investors.

It is the brainchild of Simon Beitz and Craig Fenwick, both ex-Suncorp banking professionals, and is guided by a heavy hitting board including ex Judo co-founder Alex Twigg, multi-public company director Kathy Ostin and former bank CEO and public company chair, Greg Moynihan.

Its leadership team brings a blend of extensive banking, technology and customer service excellence, which underpins the Alex ethos to make banking better.

“One of Alex’s core principles is to make banking fairer. This includes giving customers the fairest interest rate possible across both savings and lending products, without hidden fees and nasty surprises,” said Beitz.

“We do this by using technology and processes that are fast and minimise friction and unnecessary risk. We believe we can provide some of the best products and interest rates in the market, without compromising customer service expectations, while still delivering a fair result to investors.”

Alex’s lean and digital business model aims to achieve above industry average margins by targeting consumer lending funded by deposits.

Lower fees are achieved with its 100 per cent digital model, reducing overheads associated with traditional banking and branches, as well as its proprietary decisioning platform Alex Intelligence, that creates efficiencies and powers automation and the bank’s simplified offerings.

The technology has already proved its worth, processing over 10,000 loan applications (which take just three minutes to fill out) in the past six months, with a customer commitment to provide a decision on their loan application within one business day. Its 90+ day arrears rate currently sits at zero, demonstrating the prowess of Alex Intelligence in decisions and pricing credit risk.

Alex has introduced a biometric verification process embedded in its application. Identity verification is done automatically and instantly through a photo capture of the applicant’s ID and a selfie of the customer. AI technology is then used to ensure they are the same person, reducing the risk of stolen identity and fraud.

“Alex is independent and built from the ground up to give people a better banking experience. Our name was chosen in alignment with our goal to humanise banking. Neither male or female, Alex is a diverse, empathetic team whose aim is to make you feel understood, a team that gets you,” said Beitz.