Neobanks to ‘ignite change’
THE prudential regulator believes competition from Australia’s start-up banks will force the big four lenders to improve, even if the new entrants never match them for size.
The Australian Prudential Regulation Authority has this year granted full banking licenses to newcomers Volt, Xinja, 86 400 and Judo, and is hopeful that they and others can drive higher standards across the industry.
APRA regulatory affairs and licensing general manager Melisande Waterford says the regulator would like to see a steady stream of newcomers that would compel continued innovation from incumbents and higher industry standards.
“On the one hand, it’s not APRA’s role to pick winners and losers ... (but) on the other hand, APRA is keen to see new entrants succeed,” Ms Waterford told the Future Banking Forum event in Sydney yesterday.
“Challenger banks don’t need to become a ‘fifth pillar’ to serve the Australian community: their existence alone can force incumbents to up their game.”
Ms Waterford said wouldbe lenders should focus early on attracting employees and advisers with relevant banking experience. But at least one socalled neobank has found that increased automation and offshoring of processes at the big four have led to a skills shortage among Australian bankers.
Judo Bank, which received its full banking license in April, said more than 50 per cent of bankers who passed the three interviews required to join the small-to-medium enterprise lender subsequently failed a three-hour credit exam.
“The lowlight has been from an industry perspective has been this failure rate,” chief financial officer Chris Bayliss said.
“You can see why the industry is where it’s at today.” THE Australian share market closed lower, as pessimism about the outcome of the upcoming US-China trade negotiations weighs on market confidence.
The benchmark S&P/ ASX200 index finished trade yesterday down 46.7 points, or 0.71 per cent, to 6,546.7 points, while the broader All Ordinaries was down 46.7 points, or 0.7 per cent, to 6,667.0 points.
The US government is considering limiting capital flows, particularly investments by US government pension funds, to China as delegates from both countries prepared for new talks set to start today, media reports say IG market strategist Jingyi Pan said the optimism in Asian markets on Tuesday about a possible US-China trade deal has been erased by the new developments.
Almost every sector was lower yesterday, led by consumer discretionary shares and the energy sector, down 1.7 per cent, and 1.57 per cent.