Meet Australia’s newest ‘x factor’ neobank: Xinja
It’s not every day that a brand new bank opens its doors in Australia, let alone an entirely independent bank built from scratch.
Well, that’s exactly what Xinja did in September last year after receiving full Australian Deposit-Taking Institution (ADI) status from the Australian Prudential Regulation Authority (APRA).
Except, Xinja doesn’t have doors to open... at least, not the kind customers can walk through. That’s because Xinja, or Xinja Bank more formally, is a neobank!
Neobanks are completely digital, app-based and branchless banks which means they’re a total departure from the vision that most people probably have of banks in their heads - those with tellers behind counters and sprawling call centres.
The Xinja Bank Account, which was the first product to be launched by the neobank, is exclusively available through the Xinja mobile app, and the products Xinja drops in the near future will be no different.
But just how far away is Xinja’s next release, and what kind of grand plans does the neobank have for the year ahead?
Well the exciting news for savers is that the much-anticipated Stash savings account has just hit the Xinja app this week!
With a maximum interest rate of 2.25% (for balances up to $245,000), the Stash account is currently the joint highest ongoing rate in the Mozo database. The key difference being that, unlike many accounts, Stash has zero conditions, meaning savers won’t have to worry about monthly deposit or transaction requirements to get the maximum rate.
So with a bank account and savings account now out in the wild, Mozo sat down with Xinja for a chat about everything from interest rates and security to customer loyalty and future products.
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1. ‘Independent’ is a word that’s strongly associated with Xinja. But what does that mean and what will the appeal of an independent neobank be for customers?
“Xinja is not owned by another, existing financial institution (like another bank). Its shareholders are a group of private investors and family offices, along with about 2,500 ordinary Australians who invested via one or both of our Equity Crowdfunding rounds.
So we’re not a digital front end on an old bank, which is important, because you can know that not part but all of our technology is brand new, which is what will give us the agility in future; having no cumbersome and costly legacy systems also means ultimately we can operate at a lower cost and pass that cost saving on to customers in the form of low or no fees and more competitive rates.
Also, you can be assured that we’re not part of the old banking culture - we think it’s time that Australians had access to a bank that works in their interests. You need independence for this; it’s hard to stick it to the man if you’re owned by the man.”
2. Xinja have made a real effort to foster and engage with a ‘Xinja community’, so what’s the benefit of being so involved?
“We are building the bank with our customers. We’ve done this literally in that we launched Australia’s first every equity crowdfunding raise so that regular people could invest in an unlisted company. We did the same a year later and combined we’ve raised $5M - more than any other company in Australia - and have about 2,500 customers who have invested.
But as or more importantly, we’ve had our customers in from the beginning to help us design the bank. So from the conversation in the community forum and our public roadmap but also in numerous meet-ups and usability sessions, we’ve had hundreds come through the doors as well. This means they’ve had input on specific product ideas and features - how we design them and how we prioritise them.
Again, we think if we involve our customers to this extent, we’ll build something genuinely more useful that they will really like. It’s a long process, and we’ve got a long way to go to build out everything they and we want, but it’s a great journey.”
3. What makes Xinja different from other banks and other neobanks?
“Xinja is unlike traditional banks because not only is it 100% digital and made for mobile (therefore easy as - fast, no branches etc) but it’s also built on brand new, in-the-cloud technology. No cumbersome legacy systems (and legacy business) not only means faster, seamless digital service but also much lower costs which will be passed on the form or low or no fees and better rates to our customers. Furthermore, it’s also ethical; our model is based on a win-win - we think if we look after our customers and help them make more out of their money, they’ll stick with us and recommend us to their friends.
Xinja is unlike some ‘neobanks’ because it’s genuinely new (not owned by existing banks or other financial institutions) and therefore fully independent. It’s unlike the only other true neobank in Australia (Volt) in that we’re already fully in market (with a bank account, card and savings account). And it’s different to all ‘neobanks’ here in that it’s more fun; we believe that if you make managing your money engaging, people will get better at it.”
4. Xinja are entering the market during a period of historically low rates. Given this environment, how are Xinja aiming to position themselves in respect to their savings account and home loans?
“We’ve actually been vocal about the fact that consumers need to face up to a medium term low inflation low interest future, and it’s something we’re looking at now.
In terms of the rates we’ll offer, we can be highly competitive. Our Stash account is 2.25% with no strings attached (no intro period, minimum deposits, minimum payments etc.) and our loans will be too.
Will we have the best rate on the market? Not always because the big banks have so much capital to leverage, however over time, the rates we charge will continue to fall as we grow (and the rates we pay to rise) so we will become more and more competitive.
Also, we’re focused on rates becoming personalised and rewarding loyalty. So rather than a honeypot rate to get people into Xinja, we’re planning to give the better rates to those who stay with us longer.”
5. We know security if often top of mind for many Australians, so what measures do Xinja have in place to make sure customer accounts are secure?
“This is a major focus and preoccupation of Xinja, as in the new era of trust, trust is often about ‘will you keep my data safe?’ and so it’s critical for our customers (and for Xinja’s future as well). The good news is that unlike old banking systems who have to bolt it on, we’ve built in security from day one, which is more effective and ensures you’re using the latest technology.
We work on a principle of Zero Trust Architecture (ZTA) which means that the systems don’t trust each other (‘never trust, always verify’) to eliminate cross contamination. Also, we are focused on data driven security (we follow the National Institutes of Standard and Technology Cybersecurity or ‘NIST’ Framework) so that means we’re using AI to detect data anomalies early.
We’re honest about the fact that NO ONE can claim any system is 100% secure these days - this is a reality. As our head of security says, “Can we fully eliminate risks? No. But our primary job in information security is to radically mitigate them.”
6. Can you give us any hints about future product releases?
“Well, now that we’ve launched stash, round-ups to stash is just around the corner and multiple stashes is also set for Q1. We’re looking to launch international transfers in Q2, personal loans in Q1 or Q2, home loans in Q3, but more importantly lots of features and messaging along the way that starts to deliver on helping people make more out of their money. As you’ll see in our public roadmap we’ve also got a couple of ‘secret squirrel’ products coming up.”
Want to keep reading about Australia’s emerging digital banking players including Xinja? Make sure you pay a visit to Mozo’s dedicated neobanks hub for the latest news and reviews, or learn more about the Xinja Bank Account in the review further above.