‘Deposits of up to $250,000 are protected by the government in the event that the bank closes
As a kid, I remember going into the bank with my parents and drawing on deposit slips with a pen that was chained to the benchtop while they wrote cheques and deposited or withdrew money. It’s hard to believe that’s how we managed cash just a few decades ago, and it’s no surprise that digital disruptors are entering the market, providing nimble alternatives to the big four.
These start-ups, many of which emerged in 2018 and 2019, are known as neobanks. That means they operate almost entirely within smartphone apps and mobile pay functions, and have no need for retail branches or traditional physical presences. To take your money, they need to have obtained an authorised deposit-taking institution (ADI) licence from the Australian Prudential Regulation Authority (APRA) or work under the licence of another banking institution.
Here’s a breakdown of the top three neobanks in Australia.
VOLT: This was the first neobank to be issued with a restricted ADI licence by APRA after it was founded in 2017. It got a full licence to operate as an authorised deposit-taking institution on January 21, 2019. At this stage, it provides savings account services. UP: Launched in 2018, Up is the result of a partnership between software company Ferocia and Bendigo and Adelaide Bank, and offers app-based saving and spending. 86 400: As of 2019, 86 400 became an ADI. It was the first Australian neobank to offer home loans and also provides the usual savings account features you’d expect. It’s now owned by NAB, which may have an impact on your decision-making if you’re looking for ethical banks.
Why they’re thriving
This story is from the March 2022 edition of Money Magazine Australia.
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This story is from the March 2022 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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