Novatti to launch International Bank of Australia

Novatti to launch International Bank of Australia

Novatti Group Limited (ASX:NOV), a leading fintech that enables businesses to pay and be paid, announce that its dedicated banking subsidiary International Bank of Australia Pty Limited (IBOA), has been granted a Restricted Authorised Deposit-taking Institution (RADI) licence by Australia’s banking regulator, the Australian Prudential Regulation Authority (APRA).

The banking business will launch as the International Bank of Australia. Managing Director of Novatti, Peter Cook, said, “Being granted a restricted banking licence is a very significant milestone in the delivery of Novatti’s long term strategy, and is the culmination of several years of investment and development.

“We see banking services as significant across card issuing, merchant acquiring, billing and cross-border payments as it underpins the infrastructure and capability to Novatti’s core payments business while also giving us the ability to increase margins. The delivery of this
licence, and now the launch of International Bank of Australia, has therefore formed a core part of Novatti’s growth strategy for so long. In addition, the bank has the strong advantage of being able to leverage Novatti’s existing payments ecosystem and global footprint to help win customers quickly.

“We are absolutely delighted to be able to now move ahead and launch the International Bank of Australia, with a name that speaks to Novatti’s truly global ambitions.”

CEO of International Bank of Australia, Guy Carvalho, said, “A key focus for the bank will be partnering with fintechs, such as Novatti, who need an innovative and nimble banking partner.
For a long time, we have known that traditional banks have not been able to keep up with the requirements of the disruptive business models of fintechs, particularly those offering alternative ways to make or accept payments, domestically or internationally. IBOA will overcome this challenge, leveraging technology to enable the seamless end-to-end movement of money.

“In addition, we see huge potential in the significantly underserved migrant sector. The bank will have the advantage of being able to leverage Novatti’s existing payments ecosystem and global operating base to reach potential customers overseas and enable them to set-up bank accounts and transact before they even set foot in Australia. This is an incredibly unique service which will provide significant value to potential customers who want to get their lives sorted before reaching Australia.”

As part of IBOA securing the licence, Novatti finalised a Series A equity round for IBOA Group Holdings Pty Ltd (IBOA Group), which heads Novatti’s dedicated banking division and is parent entity of IBOA. Through this funding round, Novatti will make an additional $5 million investment, retaining a 91% interest in IBOA Group. Commitments under the Series A round were first announced to ASX in October 2021 and have since evolved with Novatti taking the opportunity to increase its interest in lieu of a portion of the third-party commitments. The aggregate $8 million in new funding under this round will enable the International Bank of Australia to launch and build the banking business.

Cook noted, “Novatti was able to make this further investment in the International Bank of Australia by leveraging its strong balance sheet. This includes a cash balance at the end of the September quarter of $14.5m, with a further $12.8m expected as a special dividend from Reckon Limited on 21 November. The strength of our balance sheet has enabled us to increase our position in this very exciting new opportunity.”

Disclosure: At the time of writing, Australian FinTech Pty Ltd is a shareholder of Novatti Group Limited.