APRA grants RADI licence to new entrant

The Australian Prudential Regulation Authority (APRA) has announced that it has granted In1Bank Ltd a licence to operate as a restricted authorised deposit-taking institution (ADI). 

In1Bank, formerly known as BDB Corp, was founded by Chinese investment banker James Tong, who applied for a licence earlier this year. 

According to reports, the group is also backed by Alnoor Premji and Franck Demoiseau, former colleagues of foreign based lender BNP Paribas; however, little public information is available about the new lender.

The restricted licence will enable In1Bank 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.

In1Bank is the latest of several challenger banks to be granted ADI licences by APRA over the past year, joining the likes of Xinja, Volt Bank, 86 400 and Judo Bank . 

APRA previously noted its commitment to enhance competition in the marketplace by granting licences to “viable” licence applicants. 

In an address to the Future Banking Forum in October, Melisande Waterford, APRA’s general manager of regulatory affairs and licensing, said the regulator has sought to facilitate the entry of new ADIs without lowering standards that would qualify an institution for a banking licence.

The GM claimed that APRA has prioritised quality over quantity when assessing licence applications from aspiring ADIs to ensure they can legitimately compete with incumbents.

However, Ms Waterford acknowledged that despite APRA’s efforts to ensure that prospective ADIs are viable, some challenger banks would fail to secure a foothold in the marketplace.

Ms Waterford encouraged aspiring ADIs to actively demonstrate their utility in order to gain traction in the marketplace.

The APRA GM went on to highlight the role that challenger banks can play in driving better consumer outcomes in the sector.  

“Challenger banks don’t need to become a fifth pillar to serve the Australian community,” she said.

“Their existence alone can force incumbents to up their game.

“APRA would like to see a steady stream of serious ADI licence applicants that enter the market and 10 years later are still there, large enough to be significant, competing hard and providing innovative solutions to Australia’s financial needs.”

[Related: APRA issues call to action to challenger banks]