Earlier this month, Xinja Bank was granted its full banking licence by the Australian Prudential Regulation Authority.
Here, Eric Wilson, CEO and founder of Xinja Bank (pictured above), discusses the future of digital-first banking down under with Specialist Banking.
You’ve claimed you will shake-up the Australian banking sector. What innovation do you think is needed to change the sector?
It is not so much a specific innovation, but the injection of competition in the Australian banking sector that is needed to drive change. What has hampered innovation has been the oligopoly of the big four banks here. However, barriers to entry have eased, which is allowing new entrants, such as Xinja Bank, to have an impact.
Xinja is using state-of-the-art technology; we are 100% digital. We stood up our core banking system in 11 weeks at a fraction of the cost of a traditional bank, and our entire tech stack is designed to be nimble and flexible. The lower costs and far greater potential of the technology compared with the legacy systems of traditional banks will allow us to deliver better, more personalised services to our customers, and greater value, with lower fees, higher rates of interest earned and lower paid. Open Banking could, when it comes online, serve to accelerate the progress as customers, for the first time, will be able to move banks easily and are more likely to follow the new, better services available, which we hope will end up raising the standards everywhere. Aside from the technology, the key innovation needs to be in approach; Xinja Bank is designed in its customers' interests.
Our business model is based on a win-win — we think that if we look after our customers well and help them make more out of their money, they will stay with us longer, take out more products with us and recommend us to their friends.
Do you foresee the Australian banking sector following the digital-focused path that the UK sector has headed in? How do you picture the sector looking five years from now?
Yes, we do. As has been said many times, millennials would rather go to the dentist than the bank, and they do everything else on their phones, so it's time they were able to do all their banking on their phones, too. We envisage the entrance of several neobanks into the Australian market over the next few years, and the overall neobank market share rising to similar levels to the UK over that time.
You plan to introduce lending products in 2020. What products do you think Australian customers need?
Banks need to think beyond traditional products to new areas. In the short to medium term, we're facing a low-interest, low-inflation future, and traditional savings products — and relying on traditional housing investment — may well not be broad enough. To help people make more out of their money, we need to look at a variety of forms of investment, including cross border — such as multi-currency wallets — and those currencies could include more exotic assets, such as crypto. We also need better ways of borrowing and we're looking at a variety of models in this area. Credit cards are not on the agenda, however, due to their predatory nature and Xinja won't be offering one. We will look to invent a product that provides similar benefits without trapping customers in debt.
If you could change one thing about the banking industry, what would it be?
The lack of real competition — and I very much hope that's what we are doing.
How did you get into the industry?
I spent the first part of my career working for Accenture doing large-scale systems implementations, and then, after a bit of a break, ended up at one of the big four leading the implementation of the bank's response to the Future of Financial Advice (FoFA) legislation. After that, I ended up as the CEO of one of their subsidiaries. Two years passed, and I decided that I had had enough and was going to try to break the industry by starting a bank.
If you didn’t work in finance, what would you be doing?
Wishing I was in finance? Either that or being an absolutely terrible ski instructor... mostly because I’m rubbish at skiing, but love the mountains!
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
Temenos partners with ClearBank for cloud payments
Banking software company Temenos has formed a strategic relationship with ClearBank to provide banks with a faster route to market for real-time cloud payments...
Unity Trust Bank registers 34% rise in profits
Unity Trust Bank increased profits by 34% in 2019...
Believe the hype – why explainable AI is a trend that’s here to stay
Technology has become a ubiquitous part of our day-to-day lives...
Piloting tech updates: ‘The bigger the bank, the harder it is to get anything done’
In the latest Medianett filmed roundtable session, we discussed how important technology is in the banking space, and what impact the industry expects it to have on its businesses in the future...
What banks need to know about cloud security
One of the most common perceived concerns when adopting the cloud is the issue of security...
OakNorth sees 95% increase in pre-tax profits
OakNorth Bank has announced a 95% rise in pre-tax profits in 2019 to £65.9m, up from the £33.9m recorded in 2018...
Redwood Bank signs up to Women in Finance Charter
Redwood Bank has announced that it has signed up to the Women in Finance (WIF) Charter...
Masthaven launches digital Women in Leadership programme
Masthaven Bank has launched a new Women in Leadership digital development programme for female senior leaders...
Protecting against supply chain disruption and the domino effect
Disappointingly, many UK SME business owners don’t understand their supply chains...
Confused about which Isa to choose? Hopefully this mini-guide will help…
We are now firmly in Isa season, so you’re likely to read multiple articles about the most competitive Isa products in the market and how best to make the most of your Isa allowance before the end of the tax year...
Garden shed entrepreneurs contribute £16.6bn to the UK economy
Entrepreneurs who run their businesses from garden sheds contribute £16.6bn annually to the UK economy, according to a recent study...