Newly licensed bank committed to ‘integral’ broker channel

Xinja Bank is the second “neobank” to receive a restricted banking licence, after the prudential regulator granted the licence to Volt Bank in May.

The restricted licence will enable Xinja to hold up to $2 million in deposits of less than $250,000 each, with APRA also imposing strict rules regarding the level of tier one capital, assets and liabilities, and the assets held on the balance sheets of licensees.

In February, Xinja also received an Australian Credit Licence (ACL) from the Australian Securities and Investments Commission (ASIC) after launching its equity crowdfunding offer in January 2018, with the ACL allowing Xinja to offer home loans through its digital portal.  

Speaking to The Adviser, Mr Wilson said that since the newly licensed bank’s receipt of an ACL, the lender has issued home loans on a small scale to test Xinja’s processes.

However, the CEO revealed that upon the bank’s receipt of a full ADI licence, which it hopes to receive in the second quarter of 2019, it would offer home loans to the broader market.

When asked what role brokers would have in the distribution of Xinja home loans, Mr Wilson said: “Brokers are an integral part of our business, we’ve always thought that.

“Over 50 per cent of mortgages in this country are issued through brokers.

The former NAB executive continued: “The advice a broker gives is really important. [Securing a home loan] is the largest financial decision most families will ever make and having a broker to help them with that and give them good advice is incredibly important.

“It’s absolutely not in our interests or in our philosophy to cut brokers out of that loop.”

Borrowers ‘crying out for more competition’

Mr Wilson also told The Adviser that he hopes Xinja’s receipt of the restricted banking licence would pave the way for greater competition in the banking sector.

“I hope it’s a herald of more competition to come,” he said.

“I think Australia is crying out for more competition and more banks, and the ability to give consumers a real choice.

“That’s what Xinja’s about, it’s about building a bank that’s designed with its customers’ best interests at heart.”

Mr Wilson added: “It’s an important milestone for us, and we hope an important milestone for Australia as a whole.”

Xinja has also announced it will launch a second equity crowdfunding campaign in January 2019 to help drive its growth aspirations.

According to Mr Wilson, Xinja’s decision to launch a second equity crowdfunding initiative was motivated by a promise it made to investors following its launch.

“The reason we’re doing it is because we promised to,” he said. “We said right from the beginning that we’d let our customers, our investors, to own a part of the bank and get some of the upside.”

Mr Wilson expects to raise approximately $2 million but will leave the campaign open to $5 million if there’s sufficient interest from investors. The neobank has raised over $17 million in Series A and Series B capital raisings since its launch, including $2.7 million from 1,200 retail investors in its initial equity crowdfunding campaign.

Xinja is currently in the middle of its third funding round and has said that it has a target of $10 million to $20 million.

Xinja has also recently appointed global fintech consultant Brett King as an adviser to its board, alongside senior Tesla engineer Thomas Vikstrom.

[Related: Challenger banks back ‘critical’ broker channel]