Neobanks in Australia

Image credit: Australian FinTech

This week on the Front Cover:

“ASX7000: low rates drive shares ahead of profits”, AFR.

“Costello warns investors of risky assets boom”, AFR.

“RBA urged to hold fire on rate cuts”, The Australian.

“BlackRock to dump shares in thermal coal”, AFR.

“Big four banks’ $13.8b global funding blitz”, AFR.

“Taxpayer cash used as election slush fund”, The Age.

News Summary:

Following a successful capital raising, neobank Volt announced its plans to float on the Australian Securities Exchange this year. Volt’s recent Series C funding ($70 million) was oversubscribed, with 176 investors participating in the raising. Volt is currently in discussions with investors to raise a further $50 million in Series D funding before the planned IPO in late 2020. Despite receiving APRA full banking license last year, the three-year-old bank is still currently in beta mode and will expand beyond its deposit product by launching personal loan products in June and home loans in August/ September. (Aleks Vickovich, 18/1/2020, Neobank Volt raises $70m, plans to float)

Judo Bank, Australia’s new SME challenger bank is confident about increasing its market share this year. In an interview with the Australian, Judo Bank’s Co-CEO Joseph Healy and the former head of business banking at NAB explains his plan to boost lending to over $3 billion in the next 12 months driven by an estimated $90 billion unmet demand for credit in the SME sector. Judo bank has already attracted over 100 business bankers from major banks since June and is looking at expanding its offices to Perth and Adelaide this year (Judo Bank is currently based in Melbourne and has offices in Sydney and Brisbane). Since its establishment in 2016, Judo Bank has successfully raised over $540 million from investors including Abu Dhabi Capital Group, OPTrust, Myer Family and Ironbridge Capital. The bank holds APRA full banking license and has written over $1 billion in loans. Judo’s average loan size is around $2m and has the ability to write loans up to $15 million.

The Open Banking Regime commencing in July this year will allow customers of accredited fintech companies and banks to share and transfer personal data with third parties. The regime will mark Australia’s first step towards an open data economy and hopes to encourage competition and innovation in the industry. Despite this, the Open Banking rules are said to be too costly for new fintech companies. It is estimated to cost up to $100,000 for companies to get accredited by ACCC. Further education regarding the regime and a structured data consent management system needs to be implemented to ensure a successful rollout of the regime. (James Eyers, 15/1/2020, Open Banking Rules too tough, says start-ups)

Building permit applications accepted by building surveyors on or after 1/1/2020 will be hit by additional building permit levy. The new building permit levy will fund cladding rectification works in Victoria and is estimated to raise over $300 million over the next five years. The new cladding rectification levy will apply to building work in metropolitan areas with a cost of works greater than $800,000. The rates are outlined below.

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Domestic and residential buildings will be exempted from the levy. (Victoria Building Authority)

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