New banks set to challenge Big Four

Traditional banks are facing a fresh wave of challenges from this new breed.

smart banking

The Big Four banks have been under siege since the banking royal commission revealed a plethora of dodgy practices. They are now facing a fresh wave of challenges from a new breed of bank that analysts say will shake up the sector with benefits for young and old.

Australia has welcomed its first two neobanks – entirely digital banks with no physical presence. On Monday, Xinja became the first to publicly offer transaction accounts and, on Tuesday, 86 400 (named for the number of seconds in a day) followed.

Both have been granted full banking licences and have launched their products to the public. A third, Volt, has received a full banking licence but is yet to launch publicly and offer banking services, and Up banking has launched in partnership with Bendigo and Adelaide Bank.

Neobanks promise to be cheaper, faster and smarter than the big banks. They say that with no physical branches to maintain, their lower overheads mean more savings for customers plus faster and smarter money management.

86 400 chief executive Robert Bell told Business Insider Australia that customers would have free cash withdrawals from 10,000 ATMs in Australia and, just like any fully licensed bank in Australia, deposits up to $250,000 were guaranteed by the Federal Government.

“We’re launching a fully featured transaction account and a savings account with an interest rate of 2.5 per cent as long as you deposit $1000 a month in either,” Mr Bell said.

“You can download the app on the app store and sign up in two minutes. The digital identification is done in real time, so you use your passport or driver’s licence and that’s all you need. We literally designed it (the app) so you can actually do it sitting at the bus stop.

“Once completed, you’ll instantly have access to your two ‘Pay’ and ‘Save’ accounts and an aqua-coloured Visa debit card will be on its way to you in the mail.

“In the meantime, you’ll have access to Apple/Google/Samsung/Fitbit and/or Garmin Pay as you see fit. Payments are made by Osko, making it near-instantaneous to transfer money to a friend for a round of beers, for example.”

Talking up the benefits of 86 400, Mr Bell said the service would give customers more control and greater understanding of how their accounts are tracking.

Customers would be able to see their next Netflix subscription payment or electricity bill before it dropped, he said, helping with budgeting and bill paying.

“Australians waste about $2.7 billion a year on unused subscriptions, so those kinds of reminders are vital to make sure you’re not flushing money away,” Mr Bell said.

Go to finder.com.au for a comparison of neobank services.

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    COMMENTS

    To make a comment, please register or login
    Tood
    11th Sep 2019
    11:09am
    "A long as you "........ always a catch, same with ING no overseas transaction charges as long as you put in a $1000 a month, ho hum! Took some old $1 notes into the c/wealth, first question are you a customer of the bank, still bloody mindedness for a simple transaction.
    jackie
    11th Sep 2019
    12:59pm
    Tood, $1000 a month is a bit hard for pensioners. I am looking at bank Australia. https://www.bankaust.com.au/personal/
    Huskie
    11th Sep 2019
    11:32am
    I changed from a Credit Union to ING several years ago. They are terrific. Free ATM withdrawals from any ATM (they reimburse any cost incurred, Additional interest on Cash Management account if you deposit $1000 in a month. 24/7 Helpline with operators that are in Australia and speak English. Can deposit or withdraw cash without cost at any participating Post Office so is as good as a local Branch. Cannot praise them highly enough!
    gerry
    11th Sep 2019
    3:45pm
    what are all these people on this site whinging about: :as longas you invest 1000 a month!!!!
    Ing squandered half of my allocated pension.. ACC wouldn't help me too busy helping the big fish

    It could be worse,,, if Labor had got in they would have been spending and taxing until we were all eating grass,,,
    gerry
    11th Sep 2019
    3:45pm
    what are all these people on this site whinging about: :as longas you invest 1000 a month!!!!
    Ing squandered half of my allocated pension.. ACC wouldn't help me too busy helping the big fish

    It could be worse,,, if Labor had got in they would have been spending and taxing until we were all eating grass,,,
    Intellego
    11th Sep 2019
    3:54pm
    "New banks set to challenge Big Four"

    I'll believe it when - if - it happens.
    Karl Marx
    11th Sep 2019
    6:03pm
    Time to see the manger of my bank & ask them to match the 2.5% & free atm fees etc or I'll pull all my money out.
    professori_au
    12th Sep 2019
    1:01am
    I hope the new banks do make a difference. Whoever, as an alert, check the shareholders. Check whether or not they are subsidiaries of one of the big four. We know the big four are not Australian banks but subsidiaries of other foreign corporations. Personally, I would like banking to return into ownership by the people of the Commonwealth of Australia. The present system does not create money. It creates debt from which the system makes money. Our political controlled governments sold our gold reserves and floated the pound/dollar, using paper money. Our tax department, our reserve bank and the commonwealth were government owned. Simplistically the role was to create the money based on our gold reserve and the Commonwealth bank administered it. The government did not need to borrow money, when it had the authority to create it. Not so today. Our quasi-governments borrow from the banking system, creating a debt for future generations. I wonder how much of present borrowings go to service interest. Why is so much Australian taxes held in off-shore accounts, apparently to benefit a select few, i.e politicians and senior public servants. The nullabor Rail I believe was built debt free, as the government created the funds. Everyone was paid, contractor, labourer, etc and when complete there was no debt, nor interest to be paid, because the people's money was used. Nowadays, the people's money is used to fund grants, etc. to other countries and to fund support for other countries' wars, that really have nothing to do with us, except to create, according to our governments, the need to borrow more money. Does not make sense to me.


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