- Australians appear to be backing banking competitors, after app-based Xinja was flooded with more than $30 million in the first week of launching its high interest account.
- The account, named ‘Stash’, offers a 2.25% interest rate – the highest in the country – with no strings or conditions attached.
- Founder and CEO Eric Wilson said around half of its new customers came from Australia’s big four.
- Visit Business Insider Australia’s homepage for more stories.
Australians are voting with their feet.
The country’s neobanks have just received a big vote of confidence after Xinja welcomed a flood of deposits in the first week of its high-savings account ‘Stash’.
“We have built a 100% digital bank from scratch and within 7 days of launching our first ever savings account, we’ve had a ripper response: in excess of $30 million flowing into our Stash savings accounts,” Xinja founder and CEO Eric Wilson said in a release issued to Business Insider Australia. “We are offering a market-leading rate without the usual restrictive conditions. And we are offering a new way to bank.”
Proudly noting half of its new customers were from the big four banks – ANZ, NAB, Westpac and the Commonwealth Bank – Wilson said the average balance was about $6,500. That injection of cash into the challenger is significant considering deposits are essentially the lifeblood of any banking operation. While Xinja is still developing its home loan offering, a strong deposit book will be crucial when it does launch them, looking to undercut bigger, more unwieldy banks on price.
“We’re committed to the long game of staying lean and reducing costs and overheads to do the best by our customers. Having happy customers will go a long way to helping us break the high-cost, high-profit model of Australian banking,” Wilson said.
In order to attract those customers, Xinja is offering a fairly substantial cherry. The ‘Stash’ account comes with an interest rate of 2.25%, the highest currently available in Australia and far higher than those offered by the country’s big four. It’s also on par with competitor and fellow digital bank 86 400, although without any of its conditions.
“There are no strings attached to our great rate… no introductory period, no mandatory monthly top-up amount, no minimum deposit – no bait and switch,” Wilson said.
The same can’t be necessarily said for 86 400, which requires customers to deposit $1,000 a month to receive the same headline rate. These string-attached conditions are becoming a point of contention in the banking industry, with digital banks Xinja and Volt turning up the pressure on the rest of the market to do away with them entirely.
It’s not the first time Xinja has made a dig, explicit or otherwise at a competitor. It’s previously questioned 86 400’s independence, and in fact, it’s entire status as a true neobank, by pointing out it’s a wholly-owned subsidiary of Australian payments provider Cuscal. In Xinja’s eyes, this ownership and dependence negates its claim of posing a challenge to established financial giants.
The criticism also speaks to the ethos the neobanks are trying to push: that it is customers before profits with them and not the other way around. Wilson says it’s this reason Xinja won’t bother releasing a credit card.
“The only way to make money off credit cards is when your customers stuff up. We can do better than that by our customers.”