Newcomer takes on big banks

In an age when smartphones rule and a cheque was something your grandmother used to write, a new style of bank is hoping to disrupt the way we manage our money: neobanks.

Neobanks are digital banks, controlled entirely from your mobile phone, complete with in-app customer service. They are already at large in the UK, Europe and the US, and Australia is on track to welcome our first: Xinja.

Xinja is run by former National Australia Bank executive Eric Wilson who hopes the start-up will eventually make a dent in the profits of Australia’s big four banks, which control 75% of the residential mortgage market.

While the company is still in its infancy, Xinja has just rolled out its new prepaid debit card and app, with plans to offer home loans and transaction accounts in the near future.

But when the vast majority of banks already offer full-service smartphone banking, what’s unique here? Wilson promises his new bank, when it materialises, will have a highly automated backend with “no cumbersome legacy technology”, allowing him to offer competitive products, faster banking outcomes and intuitive budgeting tools.

It’s an ambitious plan from the Xinja CEO, who is yet to mount his first hurdle: securing a banking licence from the government regulators.

Xinja is independent, with an aggressive bid under way to raise $10 million in capital partly through crowdfunding. It has already raised half of its target, with the latest offer scheduled to close this month.

But the big question hanging in the air is, could Xinja possibly budge such entrenched incumbents? Time will be the adjudicator, but if there is one thing we know for sure, convincing everyday Australians to switch won’t be easy.