- Digital bank Xinja has now surpassed $100 million in deposits just 19 days after launching its high-interest account.
- Combined with rival 86 400’s $120 million since September, the new digital banks appear to be cutting into the big four’s lunch.
- While still small figures, it demonstrates the growing appetite for banking alternatives, as digital banks eye home loans later this year.
- Visit Business Insider Australia’s homepage for more stories.
Australia’s neobanks are starting to show their fangs.
While there may have been some doubt over whether digital banks could truly challenge – and dare I say even ‘disrupt’ – the Australian ‘oligopoly’, they appear to be making surprising inroads.
Xinja, one of Australia’s newest, revealed on Wednesday it has managed to amass more than $100 million in deposits in just 19 days. $30 million of that was claimed in the first week of its high-interest ‘Stash’ account, meaning its growth has not only been maintained but actually increased in its first month – at the cost of its much larger competitors.
“More than half of the deposits have come from Australia’s big four banks, a very strong signal that consumers are keen to embrace digital banking, get a great rate on their money and are no longer beholden to the banking oligopoly that was shown in such a bad light during the Hayne Royal Commission,” CEO and founder Eric Wilson said in a statement.
It’s not alone. Fierce rival 86 400 has also put together $120 million since launching in September. Volt, a third digital bank, has even nabbed more than $10 million – particularly impressive given it won’t actually launch to the public for some weeks yet.
Of course, the numbers pale in comparison to the big four, which deal in hundreds of billions rather than millions. They, however, have had decades to amass those figures, and in the case of the Commonwealth Bank even a controversial government-backed program to convert Australian children into customers. Launching just months ago, these digital banks are mere infants in comparison.
While it’s early days then, such growth is a promising sign that customers are looking elsewhere for better banks, or – at least – better interest rates.
Digital business bank Judo meanwhile has claimed more than $1 billion of deposits, a stat which is sure to at the very least give the majors pause for thought.
With 86 400 already launching home loans – the golden goose of banking – and Xinja and Volt planning to follow suit later this year, the big four may have plenty more to be nervous about if they can likewise chip away at that market share.
If they manage that, the big four banks will have no other option but to do better.
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