Sydney-based neobank Xinja Bank has announced that it will be maintaining the 2.25% ongoing rate attached to its Stash savings account, despite the recent RBA rate cut.
On Tuesday afternoon the Reserve Bank cut the official cash rate from 0.75% to 0.50% which has resulted in a cascade of rate cuts from home loan lenders, with banks also starting to announce cuts to their respective savings account and term deposit rates too.
According to CEO and Founder, Eric Wilson, Xinja’s decision came down to looking after the interests of existing customers and breaking from the ‘traditional banking model’ of post-RBA rate cuts.
“When faced with higher than expected deposit flows, and an RBA rate cut, most banks would just drop deposit interest rates, hurting existing customers while chasing new ones. That’s not what Xinja is about.”
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Since launching, Xinja has already onboarded 25,000 new customers and taken over $350 million in deposits.
However, as part of the decision to maintain the 2.25% ongoing rate at its current level the neobank also announced that it would be hitting pause on taking on new customers for the time being.
“We won't drop the rate on Stash accounts now, just because the RBA has dropped the cash rate and demand is much higher than expected,” said Wilson.
"But there are three things we have to balance: the RBA rate cut makes it more expensive for Xinja to hold deposits at the same rate before the launch of our lending program; there has been an unprecedented uptake of Xinja Bank by Australians; and now, how we - as a new bank - manage the costs of those deposits.”
“Managing those costs as a new bank in a way that cares about existing customers means pushing the pause button on opening new Stash accounts for a while.”
At the time of writing, the 2.25% ‘no strings attached’ ongoing Stash account rate was both the highest base savings rate in the Mozo database and the joint-highest ongoing savings rate - a position it shared with fellow neobanks Up and 86 400.
Unlike the Up Saver Account and the 86 400 Save Account Xinja doesn’t require its current customers to meet any minimum card transaction or deposit requirements.
However, the Xinja account is obviously no longer available for new customers, whereas the other two neobanks have announced no moves to limit their customer inflows.
RELATED: Xinja Stash savings account hits $200 million deposits less than a month after launching
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