Australia gives banking licence to mobile startup firm Xinja, Latest Business News - The New Paper

Australia gives banking licence to mobile startup firm Xinja

This article is more than 12 months old

SYDNEY: Australia granted a new banking licence to online-only banking firm Xinja Bank yesterday, allowing the start-up to compete against the country's "Four Big"lenders that dominate the sector.

The licence from the financial regulator allows the primarily mobile financial company to compete for deposits and use the funds to lend.

"We want people to have a real alternative to the incumbent banks," chief executive and founder Eric Wilson said in a statement.

Xinja will grow its product line from pre-paid cards into bank accounts, and plans to add lending products in the first quarter of 2020.

Australia's deposit and lending market is overwhelmingly dominated by Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank.

An inquiry by the country's top economic adviser found that a lack of banking competition has been detrimental to customers.

Online-only banks are just starting up in Asia, as non-banking firms seek to leverage their technology and user databases to challenge traditional banks in offering services.

Last month, Singapore kicked off the process to issue up to five new digital bank licences, while Hong Kong is set to see the launch of so-called virtual banks this year.

In the last year, the Australian Prudential Regulation Authority has been more proactive in granting new banking licences to competitors.

Until now, Xinja only had a restricted banking licence. - REUTERS