Austrlia’s Digital Banks Xinja, Judo Bank, 86 400 Attracting Millions in Savings After Launching High Interest Rate Accounts

Australia-based digital banks Xinja, Judo Bank and 86 400 have been attracting millions of dollars worth of savings from the nation’s banking clients after the introduction of their high interest rate accounts.

Traditional industry players like ANZ, Westpac, NAB and Commonwealth Bank have reportedly lost around half a billion dollars in savings deposits in just a few months, Nine News Australia reported. The organization determines that the rates offered by neobanks are as high as 22 times as those provided by Ausralia’s big four banks.

Xinja, the banking challenger which recently introduced its savings account, called “Stash,” has reportedly seen $30 million flow via its platform in deposits during the past eight days. The bank’s savings account provides a 2.25% interest rate on its customers’ savings.

Eric Wilson, CEO at Xinja, said that bank, which acquired a full authorized deposit-taking institution license in September 2019, has had “a ripper response.” The banking challenger is now preparing to introduce personal loans and home loans, however, it stands  against credit cards, which it says depend on “your customers [to] stuff up.”

Nine News compared the interest accumulated on a $10,000 balance over a two-year period in a big four bank as opposed to Xinja’s Stash account. If the funds were deposited at a big four banks, then it would accumulate $55 and $85 interest over a two-year timeframe, however, if it were kept in a Stash account, it would be able to accumulate a significantly higher $460.

Another challenger appears to have struggled to manage the constant flow of demand on its platform. 86 400 noted via Twitter that its app had been down because of technical issues its tech partners were having.

Challenger bank 86 400 said it had accumulated $100 million in deposits during the past four months, and challenger Judo Bank claims it collected $400 million in deposits during the past three months.

Low-interest rates are also being offered by large UK-based banks on savings accounts. This led to the nation’s financial regulator, the Financial Conduct Authority (FCA), to instruct UK banks to offer one, single interest rate for all savings accounts in order to raise rates overall and save users a total £ 260 million. The FCA noted that the competition “is not working well” for 40 million UK customers using local banks and other financial institutions for their savings.

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