AAP Finance

‘Neobank’ 86 400 gets full banking licence

By AAP Newswire

Australia's banking regulator has granted a full banking licence to 86 400, a challenger bank backed by payment processing company Cuscal.

The Australian Prudential Regulation Authority granted the Authorised Deposit-taking Institution (ADI) licence to 86 400 on Thursday following a two-year process designed to ensure it would be a secure steward of customer funds.

"We're really pleased to be the newest bank in Australia," 86 400 chief executive Robert Bell told AAP.

He called the APRA's process "incredibly thorough," adding "we've had every element of our business stress-tested to confirm that we are as robust, secure and safe as any bricks-and-mortar bank".

86 400 will to submit its app to the Apple's App Store and the Google Play Store and will start accepting customers off its waitling ist once those apps are approved, which Mr Bell expects will take a few weeks.

It will open for general business soon after that.

86 400 is among a group of "neobanks" seeking to shake up the financial establishment.

None will have physical bank branches and will instead specialise in serving customers via their smartphones.

Volt Bank, another challenger bank, was granted a full licence in January - the first new retail bank to get one in nearly two decades.

It is working towards a launch date, as is Xinja Bank, which currently has a restricted licence limiting it to holding $2 million in deposits.

Judo Bank received a full licence in April and is serving its customer base of small- and medium-size businesses.

With 86 400 on the list, the country now has 92 Australian-owned authorised deposit-taking institutions plus seven foreign subsidiary banks and 48 branches of foreign banks.

Xinja chief executive Eric Wilson congratulated 86 400 on receiving the banking licence but said given it was owned by an existing bank for now, he did not see it disrupting the industry as much as a "truly independent neobank" would.

Cuscal, a payment processor for credit unions, has received a temporary exemption from APRA from a rule against institutions with ADI licences owning other such firms.

But it has hired Morgan Stanley to take on more investors and reduce its ownership of 86 400 to less than 20 per cent.