Neobank CEO hits back at criticism

Heritage Bank CEO Peter Lock recently sought to downplay the role of neobanks as an alternative to the big four in light of misconduct uncovered by the financial services royal commission.

Mr Lock accused neobanks of having a profit-driven appetite that resembled that of the major banks, which he said has partly been the cause of misconduct identified by the royal commission.  

However, speaking to Mortgage Business, Xinja’s CEO insisted that neobanks would “shake up” the Australian landscape with a nuanced approach to banking.

“The main thing about neobanks [is] there’s no old-style banking costs — no bricks and mortar branches, no legacy banking IT systems and no old-style banking models,” Mr Wilson said.

“Xinja is using feedback from people to help build its bank and wants to provide better banking, better money management.”

He continued: “We will make a profit. We are running a business. But we will be delivering better banking, and we certainly won’t be doing what the big banks have done to their customers, as highlighted in the royal commission: over-charging, charging fees for no service and charging dead people.”

In his criticism of neobanks, the Heritage CEO also claimed that “there’s nothing that digital banks and neobanks offer that customer-owned institutions such as Heritage Bank don’t already offer” to borrowers seeking major bank alternatives. 

In response, Mr Wilson said: “[Xinja] won’t be like any other traditional, old-style Australian bank, whether that bank is a mutual or one of the big four.

“Xinja has no old-style banking technology, no legacy banking systems and no bricks and mortar branches, no thousands of staff. That means it can deliver lower costs and better banking.

“It is not a digital front for an old-style established bank.”

Mr Wilson also claimed that the criticism of neobanks suggested that the Australian banking sector had not heeded and adequately addressed concerns raised throughout the royal commission.

“Statements like this one continue to demonstrate that some in the banking industry continue to miss the lessons from the royal commission, undermining the good work and reform that many of us, not just neobanks, are trying to do,” Mr Wilson said.

The Xinja CEO concluded: “We are excited about what we’re bringing to Australians, and we know they want change.”

Xinja was recently granted a restricted banking licence by the Australian Prudential Regulation Authority, ahead of its push for a full banking licence.

Xinja was the second bank to be granted a restricted licence after the prudential regulator granted the first licence of its kind to Volt Bank in May 2018.

[Related: Lender CEO dismisses neobank ‘hype’]