Loosening legislation making it easier for lenders to call themselves banks is encouraging a new wave of fintech lenders as Australians embrace Neo Banks.
The Government has made it easier for authorised deposit-taking institutions to call themselves banks, with the hope that it would reduce the cost of loans.
Currently only ADIs with more than $50m in capital can call themselves a bank but Scott Morrison did his part in ensuring that regulation was removed.
In the UK, where easing usage of the word bank in 2013 encouraged the growth of new ‘digital banks’ such as Monzo and Starling. It led to a flood of new online lenders into the market, forcing the major banks to slash their interest rates and product pricing.
New entrants in Australia
APRA had already been making making it easier for ADIs to call themselves banks in recent years, with new banks including Bank Australia, previously the Members and Education Credit Union.
Credit unions, mutual and challenger banks provided a number of competitive interest rates to clients. Due to their small size, however, they were overwhelmed by surges in lending.
The same surges are occurring as Neo Banks become a trusted consideration for Australians. Xinja for one can only open up a certain number of accounts before being forced to refuse customers, essentially “selling out” of stock much like a grocer or retailer might.
Welcome the new competition
Simple comparison table
| UP | 86400 | XINJA | REVOLUT | |
| Apple Pay / Google Pay | ✔ | ✔ | ✔ | ✖ |
| Deposit Money in via PayID | ✔ | ✖ | ✖ | ✖ |
| Transfer money via PayID | ✔ | ✔ | ✖ | ✖ |
| Handy Push Notifications | ✔ | ✖ | ✖ | ✔ |
| Savings Account | ✔ 2.25% (bonus) | ✔ 2.25% (bonus) | ✔ 2.25% (bonus) | No |
| Advanced Budgeting Tools | ✖ | ✖ | ✖ | ✔ |
| Upcoming Bills& Payments | ✔ | ✔ | ✖ | TBC |
| Detailed Spend Analytics | ✔ | ✔ | ✖ | ✔ |
| Link Your Other Bank Accounts | No | Yes | No | No |
| International Transaction Fees | No | 1.5% | No | Only On Some Currencies. |
| Is there a waitlist to join? | No | No | No | Yes |
| Disable your card (not cancel) | Yes | No | Yes | Yes |
| Savings Roundups | Yes | No | No | Sort of (round up into a no interest paid ‘vault’) |
| Live Chat Support | Yes | No | Yes | Yes |
Savings Rates Comparisons Table – Up vs 86400 vs Xinja
Attractive & competitive rates offered, let’s break it down side by side
| UP | 86400 | XINJA | |
| Multiple Savings Accounts | Yes – you can name them | No – Only One Account | No – One “Stash” Account |
| Minimum Monthly Deposit | No | Yes $1000 per month | No |
| Maximum Rate Possible p.a | 2.25% | 2.25% | 2.25% |
| Base Rate p.a | 0.50% | 0.40% | 2.25% |
| Bonus Rate p.a | 1.75% | 1.85% | 0.00% |
| Bonus Rate Requirement | 5 debit card or digital wallet purchases from everyday account per month | None | |
| Bonus Rate Limit | Up to $50k in savings account. Base rate applies above $50k. | Up to $100k | Up to $245k |
| Will Withdrawal Affect Bonus Interest | No | No | Not applicable |
| Withdraw / Transfer Limit | $30,000 (but you can speak to them) | Unclear | |
| Dedicated BSB/Account for Savings accounts transfers | No | Yes | Yes |