The royal commission has provided a “great opportunity” for challenger banks to build a “new trust” with customers as partnerships will continue to underpin the viability of this new sector.
Speaking on a panel at Sibos on Wednesday, 86400 chief executive Robert Bell (pictured left) said that trust has obviously come under the spotlight from the public inquiry.
“There are two types of trust. Everyone in Australia trusts their bank to be competent with doing things such as making a payment.
“But do they now trust their banks to do the right thing? No. [The royal commission] has provided a great opportunity for new banks to build a new trust with banks and that is what we plan to do, Bell said.
For Xinja chief strategy and innovation officer Van Le, the bank’s approach to forging trust with its customers is also about adopting a new way for its customers to interact with finance.
“We spoke with customers and while they expected convenience and speed, they also wanted a more thoughtful approach to the role money plays in our lives.
“They want to spend quality time with their families,’ she said.
Services that anticipate their financial needs will be offered by Xinja, which will underpin a deeper relationship with its customers.
In addition to the trust element, volt bank founder Steve Weston said new banks will also give consumers greater transparency around rates and charges of the products that it offers.
Small but valuable
On volt’s platform for example, consumers will be able to see the various interest rates offered on term deposits and mortgages across all the banks.
“By using data analytics, we are giving consumers all the information they need to make the transparent decisions.
“We may not have a large market share, but we are already changing the way we do banking,” Weston said.
Partnerships will continue to remain important for the neobank sector.
Weston anticipates that in 10 years volt will get one per cent of the market share in mortgages and deposits which is “small but valuable”.
Customer acquisition of course will be important, and this will be driven by partnerships.
“We have already announced a partnership with PayPal and we expect further similar deals to be announced. It’s part of our approach to customer acquisitions,” Weston said.
He added that many like-minded businesses deep customer bases that are looking for these types of joint ventures but are not “getting a hearing from the banks because of the royal commission, or because of big bank legacy systems or simply because of their arrogance”.
“We have a zero-customer base, we love you and will be happy to take you.”
The panel acknowledged that mortgages will be an area that can’t be fully digitized and again partnerships will play a role.
Weston is eyeing such an approach with digital mortgage brokers.
The three neobanks also highlighted the importance of having high barriers to entry in the market.
While their process to get a restricted license was tough, Weston said it was important that new banks “earned their stripes” in being able to set up their businesses in the market.
Xinja’s Le added that the system had to be robust as a collapse of even one neobank would not at all be an advantage for the burgeoning sector.