The Australian Prudential Regulation Authority (APRA) has announced that it has granted a restricted authorised deposit-taking institute (RADI) licence to fintech lender Xinja.
Xinja Bank is the second “neobank” to receive a restricted banking licence, after the prudential regulator granted the first licence of its kind 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.
Xinja has said that with the lender now becoming a bank through its receipt of a restricted ADI license, it can strengthen its challenge against Australia’s “entrenched major banks” by “showing people how innovation can make banking work in their interests”.
Former NAB executive and Xinja co-founder and CEO Eric Wilson said: “We are super excited, and this announcement confirms our belief that Xinja represents the new way of banking in Australia. It brings us one step closer to fulfilling our purpose, which is to help people make more out of their money.
“Xinja is all about making banking easy, frictionless and even fun so that people can make better, faster money decisions without the angst.
“We are very proud that Xinja’s owners include not only local and overseas professional investors but our staff and thousands of cardholders who have invested, as part of our equity crowdfunding, and want to join with us to revolutionise banking,” he said.
Xinja chair Lindley Edwards added: “Xinja will bring greater competition to the market, which has been stagnant for too long when it comes to looking after the interests of ordinary Australians.
“We have built Xinja from the ground up, which means we have listened to people who want to bank with us and used their feedback to help us build a better bank.”
According to the neobank, more than 22,000 people have signed up for Xinja, which has an app and prepaid card that also serves as a no-fee travel card in use in more than 70 countries.
Xinja also said that through its adoption of the sap Cloud for Banking platform in November, it has “stood up” its core banking system, which it said was achieved in record time.
“We believe old-style banking is about to face serious challenges,” Ms Edwards continued.
“Xinja has been asking ‘what’s the very best we can do?’ We have been looking to other innovators and disruptors around the world to bring the best to our banking.”
The neobank also recently appointed global fintech consultant Brett King as an adviser to its board, alongside senior Tesla engineer Thomas Vikstrom.
“We know people want seamless, transparent banking,” Ms Edwards said. “We also believe our interests should be more closely aligned: what we do should be good for our customers, and good for us.”
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 an equity crowdfunding campaign. It has also announced it will launch a second equity crowdfunding campaign in January 2019.
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.
[Related: Crowdfunded neobank receives credit licence]