Neobanks

Discussion in 'Money Management & Banking' started by Graeme, 3rd Jan, 2020.

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  1. Graeme

    Graeme Well-Known Member

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    I've just opened up an account with Xinja, and I was wondering if anyone else was experimenting with the neobanks?

    So far the good points are:
    • No monthly fee.
    • No fees for international card payments.
    • No fees for international ATM withdrawals.
    • Support for Google Pay and Apple Pay.
    • The app appears to be quite slick.
    • Xinja is independent of banking groups, with its own deposit taking licence.
    The bad points are:
    • BPay support is under development.
    • Faster payments are under development.
    • Savings account is under development.
    • No joint accounts.
    • Their graphical design and company identity is reminiscent of a MySpace page with an emoji fetish!
    It feels a bit half-baked, and very much a product in Beta. Looking at their roadmap, most of the above issues should be built in the first half of the year, but I've worked in software long enough to know that delays will happen...

    DBM Consultants tried out the neobanks in October, and felt that Up were the only one who're currently oven ready. Maybe I'll give them a go next.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Never heard of them, are they a ADI? authorised deposit taking institution?
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Xinja are an ADI, they received their banking license in September 2019. However...

    BPay, Joint accounts & Savings accounts are still under development? Seriously??? These things are the minimum standard, not a stretch goal.

    Before I put any money (borrowed money or savings) with any financial institution, I'd like to see that they're fully operational, have a few years under their belt and have survived at least one financial crisis.

    Odds are all those other features you've stated aren't real either, they're fudging them by throwing money at the problem and it's being funded by venture capitalists or a pyramid scheme.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Why would one use them?
     
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  5. Navjit

    Navjit Member

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    Yes I have been using Up Money for the last 14 months. The other good points are:
    • Good Savings Interest rates (Up 2.15% and Xinja just released there savings account 2.25% for up to $245,000 i think just introduced)
    • Spending Insights - easily see your spending habits e.g. how much you spend on coffee or at Woolies over period of time
    • See upcoming payments to give you an idea of cash flow requirements
    • Ability to easily create savers to save towards different goals
    • No foreign transaction fees
    • Payment splitting / converstaional payments - ability to see easily see your payment history with a particular person in a message format
    • User interface much more modern, intuitive and friendly.
    • Stronger customer focus
    The main bad point as you noted on some of these neobanks is the development of the products is not complete and will take time. Up was supposed to release Joint accounts late last year but now could be another 6 months. I have had a look at other neobanks like 86400 and Volt as well. Give them 6-12 months and I think they offer users much better value.

    There are some changes coming with Open Banking being rolled out this year and this will play a key part in being able to understand ones financial situation/position a lot better and improve individuals ability to budget and manage their money. Positives for consumers.



     
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  6. Navjit

    Navjit Member

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    much better ongoing savings rate without conditions, lower to no fees, improved understanding of how you spend your money.
     
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  7. hammer

    hammer Well-Known Member

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    Why would you use something like this over ubank or ING?
     
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  8. Navjit

    Navjit Member

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    I like ING and uBank they are the best of the rest however the neobanks have a greater focus on:
    • Utilising technology better and faster to provide value to the customer
    • Being ethical and improving their users finanical health/awareness
    The above two points are massive imo. A couple of examples of this is for Up bank in particular:
    1. Up bank integratration with Afterpay (although i am not an advocate of Afterpay)
    2. Up bank planned integration with Transferwise which will gives users ability to make international payments a lot cheaper than using bigger banks.
     
  9. Graeme

    Graeme Well-Known Member

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    @Navjit I've downloaded the Up app, and it feels a lot more together than Xinja. Fewer emojis too. :D

    It looks like there's some interesting analytics around tracking spending too.

    I didn't know about integration with TransferWise, though it's not that hard to load money into that service.
     
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  10. jyeung80

    jyeung80 Well-Known Member

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    I was just looking at some of the neobanks earlier this week. I ended up opening an account with Xinja although I haven't started putting any money in there. I didn't go with Up because you need to make 5 purchases a month to earn the bonus interest rate. I like Xinja because their account is simple - no minimum deposits, no purchases required. If people aren't into neobanks yet, other options I found for savings accounts with "high" interest rates are UBank, RAMS, BOQ, Australian Unity, ME Bank, RaboBank. They all have some kind of criteria you need to meet to earn the high interest rate though.
     
  11. Graeme

    Graeme Well-Known Member

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    Just bumping this up.

    I've got an account with Xinja, but received an email this morning informing me that they're shutting down. They were missing a number of features, including BPay and faster payments, which were meant to arrive this year, but didn't.

    My main account is with Up, so I've transferred everything over to that. They're still going.

    I'm interested in 86,400, might try them out.
     
  12. Graeme

    Graeme Well-Known Member

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    Eleven months later and joint accounts are still in development. 86,400 is the only neobank currently offering them to the best of my knowledge.
     
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  13. 27269

    27269 Member

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    I'm a very minor shareholder of Xinja (invested from Equitise a couple of months ago) - I was equally surprised to receive that email this morning. I figured they'd gain substantial traction with the way they were approaching things (highest interest rates on savings at some points in time, the millennial / Gen Z marketing vibes, etc) but I guess COVID inconvenienced them quite substantially with a lot of prospective investors pulling interest due to capital constraints.
     
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  14. Graeme

    Graeme Well-Known Member

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    Xinja were promising a slew of new features, including BPay and PayId, but they kept on being pushed back.

    Software development is my day job, and I know that it can take longer than expected. I suspect that they were under resourced and the problems were harder than envisaged.

    The phone app had a bit of a facelift recently, so development was ongoing.
     
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  15. apk

    apk Well-Known Member

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  16. FredBear

    FredBear Well-Known Member

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    I have a xinja account, and got their text message last night that they were closing their banking business. No surprise, it's been a downhill trajectory for months, first no new stash accounts, then cuts to the maximum amounts and interest rates.
     
  17. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Xinja are goneski. APRA require them to return all deposits. Its a orderly "winding up" and not a liquidation but that likely will follow. It should act as a lesson to many who think disruption means something works. Like Ola failed to disrupt as well as other food delivery services that folded. It wont be the last. Not all good ideas work.

    Xinja is reported to have offered unrealistic deposit rates of 2.5% (dropped to 1.8%) and it had no linked lending product which generated the generous rate paid. And had no model that produced revenue. It ceased paying deposits any return at all a few days ago. APRA have reminded deposit holders of the $250k gurantee on deposits under the Financial Claims Scheme and will supervise orderly withdrawal of deposits. APRA are asking depositors to withdraw promptly.
     
  18. Redwing

    Redwing Well-Known Member

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