One of the leading neobanks in Australia, 86 400, has today announced the proposal for its acquisition within the NAB family, combining with UBank.
While the acquisition is still subject to regulatory approvals, NAB has also released a statement noting it proposes “to acquire the remainder of shares in 86 400 by way of a scheme of arrangement”.
An alternative to the big four banks, 86 400 found success in rolling out everyday banking products to its over 85,000 customers.
- What is a neobank? A neobank is a licensed bank that operates solely through smartphone apps.
It also launched the first “digital mortgage” for brokers in November 2019, with December 2020 its biggest ever month for home loan applications. 86 400 currently has more than $270 million in settled or unconditionally approved home loans.
What does this change mean for existing 86 400 customers?
By sidestepping the ridged infrastructure of traditional banks and reducing its overheads, the app-based financial provider could offer more innovative fintech solutions, while passing on its savings in the form of fewer fees and competitive interest rates.
RateCity reached out to 86 400 for information on whether customer accounts would stay the same. Currently, there's “no immediate change for customers, who will still be 86 400 customers, bank using the 86 400 app and make purchases with their physical 86 400 card or connected Apple Pay, Google Pay™, or Samsung Pay wallet,” a contact advised.
Further, many Australians that are fed up with the big four banks have looked to neobanks, like 86 400, as a breath of fresh air and competitive alternative.
RateCity also inquired into what this proposed change may mean for the customers who chose 86 400 as a big bank alternative.
86 400 CEO, Robert Bell, said: “The implementation of the scheme requires approval from shareholders, regulators and the courts, so it’ll be business as usual for some time and 86 400 will continue to operate as a separate business, run by our dedicated team from our headquarters in Sydney.”
"Customers will continue to enjoy the same great experience, smart products and innovations they’ve come to expect from banking with us."
"Neobanks have always been about providing customers with better products and features, better value, better services and a better experience.
"The fact we can now do this at scale is good for all Australians. We’ll be able to invest even more in our customer experience, product development and innovation over the long term, helping more Australians take control of their money," said Mr Bell.
On the other hand, 86 400 deposit customers may feel a greater sense of security, especially off the back of the December announcement that Xinja was to exit the industry and return all customer funds.
In a statement released today, 86 400 Chairman, Anthony Thomson, said: “Coming together with UBank gives us the scale, funding and capital to dramatically accelerate our growth and reach even more Australians with our smarter approach to banking.”
“It means we’ll be able to invest even more into developing smart products, experiences and services, helping our customers own their home faster and reach their goals sooner with smarter spending and saving.”
Players still in the neobank space
Following Xinja’s exit and pending the approval of the 86 400 and UBank acquisition, the number of players in the neobank space appears to be dwindling.
That being said, these app-based providers are still offering some of the most competitive savings account interest rates on the market, all of which currently sit at, or above, 1 per cent.