APRA grants ADI to digital bank

The Australian Prudential and Regulation Authority (APRA) has announced it has granted digital bank Avenue Bank Limited (Avenue) a licence to operate as an authorised deposit-taking institution (ADI), free from restrictions under the Banking Act 1959.

According to the digital bank, it will initially focus on alleviating a “significant pain point” for businesses; the “laborious” process of securing bank guarantees for landlords.

The bank, which counts Liberty Financial Group as a major shareholder, is currently not operating through the broker channel.

“Avenue will distribute its innovative bank guarantee direct to Australian businesses, and through referrer channels including members of the commercial leasing ecosystem such as leasing agents, landlords and tenant advisors,” Avenue chief executive Peita Piper told Mortgage Business.

She stated that the bank has “reinvented the bank guarantee” to provide “fast, fair and fuss-free” services to Australian businesses.

“Australia’s banking landscape has evolved, yet the bank guarantee market remains stagnant, burdened by outdated, paper-based processes. Small businesses are stifled by unnecessary delays, uncertainty, and financial strains,” she said.

“Despite nearly half of business owners believing the bank guarantee process takes too long, there has been little innovation in this roughly $9 billion segment.”

According to Avenue, it is the “first and only” bank to specialise in bank guarantees, with its digital solutions aiming to ease the management of bank guarantees for landlords.

The digital bank also seeks to enhance security and mitigate the risk of loss, theft, or fraud through its digital origination process.

Avenue research revealed that 29 per cent of businesses have had to defer an office move and a further 46 per cent have had their moves disrupted because of the process of obtaining a bank guarantee.

“With specialised customer service, we will move as fast as the customer moves,” Piper said.

The bank reportedly offers a competitive interest rate to customers on their security deposits, which are “100 per cent government-guaranteed” up to $250,000 per account holder. Avenue also confirmed it would be waiving application fees for a limited time.

“This is only the beginning for Avenue,” Piper said.

“We are committed to delivering further innovation to the bank guarantee market.”

APRA previously granted a restricted ADI (RADI) to Avenue Bank in 2021. The bank was founded by Dale Hurley and Colin Porter (who also founded CreditorWatch).

Prior to being granted the RADI, Avenue Bank closed a $37 million Series B funding round to assist in its launch.

Former chief executive George Confos commented at the time that the bank’s “innovative and digitally enabled product suite” would deliver a “much-needed cash injection to Australian businesses” following the impacts of the COVID-19 pandemic.

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