Open banking opens the way for neobanks

With the new open banking policy set to take effect July 1, neobanks could soon become the more popular choice for Aussies over the big four.

At the moment, it’s pretty tough for customers to access their financial information if they are with one of the big banks, making it hard to switch to a different institution for a competitive offer on financial products, like a home or personal loan.  

This is where open banking comes in. Basically, these new regulations ensure that big banks give people and smaller banks greater access to their customer data, which can help Australians make a change more easily if they want to and ultimately improve competition in the banking sector.

While some people may simply make the switch to a smaller bank, others may use the opportunity to go digital and even take the leap to a neobank.

“Open banking will create new opportunities - some obvious, some we can't even envisage yet - for neobanks and banks, but more importantly for their customers,” Executive Board Director and Co-Founder of Xinja, Van Le said.

“Open banking is the first cab off the rank in the open data movement, which marks a shift of control of personal data away from corporates, to the consumer - in a climate where there is an expectation that corporates - in this case banks - need to show they will use customer data in the interests of the customers, not just themselves.”

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Neobanks, like Xinja, are paving the way to the new world of banking, as they are 100% online and are designed to be operated all from your smartphone, whenever and wherever you need.  

Xinja currently holds an authorised deposit-taking institution (ADI) licence, but is aiming to roll out both a transaction and savings accounts in the near future.

But Xinja isn’t the only new digital player on the field, other fintechs like 86 400, Judo Bank, Pelikin and Up are joining the wave of neobanks that aim to transform Aussie banking. 

Saying goodbye to the Big Four

At the beginning of the year, global measurement and data analytics company, Nielson, found that two thirds of Australians still bank with the big four, but there was a significant spike in numbers of those who said they would go digital instead.

From the 2.1 million that were wanting to make the change, 16% said that they’d opt for a digital banking alternative.  

Xinja’s Van Le suggested that customers are diverting from the big four because of poor service, dishonesty, exploitation, and simply because they are out of date.

“Neobanks are not just 100% digital and designed for mobile, but they banking redesigned from the ground up, free from legacy technology, legacy siloes, and legacy thinking,” Le said

“Xinja's entire model is built around helping our customers make more out of their money. If they do well, so do we. We are focused on analysing their data so that we can deliver them more value.”

Why choose a neobank?

Here at Mozo, we’re all about helping you get the biggest bang for your buck, and with the rollout of open banking only weeks away, Aussies will have more choice when it comes to their banking.

So when the time comes to review your banking set up, here are a few reasons you might go for a neobank instead:

• Low costs: in many cases neobanks don’t have the high fees and extra costs that are associated with more traditional banks, which could be a clever way to dodge losing money on fees that stack up over time.
• Unique products: from innovative travel cards to prepaid cards that give you cashback on purchases, many neobanks are launching some notable products that aren’t offered by other institutions.

• Standout app features: because they are 100% digital, naturally neobank apps are pretty impressive. Not only are they aesthetically pleasing and easy to navigate, they also have great  in-app features, like cutting-edge budgeting tools, savings strategies and personalised spending categorisation.
• Everything you need at the touch of a button: you are literally holding your entire bank in the palm of your hands. Neobanks offer 24/7 in-app support, usually through chat services, as well as card freeze and instant transfer options that are as easy as a simple tap whenever and wherever.

RELATED: Digital banking and neobanks

Thinking of making the switch to a neobank? Or simply want to find out more? Head over to our fintech hub, for all things digital banking.