Chief executive Eric Wilson says Xinja aims to start offering full transactional bank accounts and more home loans next year if it obtains approvals from APRA.
The banking royal commission opened the door for Xinja and other neobanks to shake up the status quo among Australia’s big four banks, he said.
“It highlights the need for new independent neobanks to come into this market and shake it up,” Mr Wilson said.
“There is no better silver bullet for these kinds of problems other than ethical competition.”
Welcomes competitors
Xinja and other neobanks such as Volt Bank and 86 400 are trying to disrupt the Australian banking industry by replacing traditional bricks and mortar branches with sleek phone apps that allow customers to split bills with friends, track spending habits and freeze lost cards with a swipe of their finger.
UK-based neobank Revolut is threatening to enter the Australian market, with 20,000 Australians already jumping on its customer wait list.
But Mr Wilson said Xinja would welcome other competitors.
“We don’t want to be the only ones in the market. We’d like four or five of us out there. The more the better to revolutionise this industry,” said Mr Wilson.
Xinja has so far raised $2.7 million by crowdfunding from 1200 retail investors via the Equitise platform. The neobank plans to launch a second round of equity crowdfunding in January 2019.
“Crowdfunding isn’t the easiest way to raise money, but we feel that it’s absolutely essential that the people who are our customers and are interested in us should be allowed to invest in us,” Mr Wilson said.
Together with contributions from wealthy individuals in Australia, Asia and the US, Xinja has raised about $20 million so far, according to Mr Wilson.
Xinja’s invitation to invest has tapped into the interests of younger, aspirational investors, with 25 to 34-year-olds investing most frequently. Members of the crowdfund could chip in as little as $250 for 200 shares in the bank.
Encouraging retail investors to participate in a start-up comes with its own complications, according Mr Wilson.
“It’s really important that people invest with their eyes open and know this is a medium-term investment. It is higher risk and higher return, potentially, than other investments,” he said.
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