The neobank could enter the home loans market in the next six months
Australia’s newest neobank may be setting itself up to crack into the home-lending market in the next six months.
Alex Bank is one step closer to getting its full banking licence after going live with its cloud-based software, according to a report by The Australian. The neobank launched in 2018 and received its restricted authorised deposit-taking institution licence in 2019.
In order to gain the technology necessary to support a larger bank business, Alex Bank inked an agreement with Swiss software firm Temenos, The Australian reported. The bank has already used Temenos tech to process 10,000 loan applications, with applications taking an average of three minutes to fill out and three seconds to process.
Alex Bank said the platform gave it the capacity to quickly scale its services. CEO Simon Beitz told The Australian that, although Alex Bank had been given two years to gain its full banking licence, he hoped to achieve it in the next six months.
“The new banking space is quite a lonely space,” Beitz said. “Who do you have? Xinja – they’ve fallen over. 86 400 – they have been acquired by NAB.”
Alex Bank is currently focusing on the consumer lending market, The Australian reported. The neobank already has an $8 million loan book and aims to reach $50 million by the end of the year. None of the bank’s loans are in 90-day arrears, and only a few are in 30-day arrears.
Beitz told The Australian that the neobank planned to grow its current headcount of 35 to nearly 70 in the next 12 months. He said Alex Bank was capitalising on big banks’ failure to address delays as the COVID-19 pandemic has hit offices used to process applications.
“Banks have retreated from consumer finance, either consciously or subconsciously,” he said. “They’re focused on transactional banking. We’re focused on those areas with wider margins at first, which helps drive our markets.”
Read next: “People in T-shirts” aim at $30bn loan book
Alex Bank chief financial officer Craig Fenwick told The Australian that the bank had secured personal loan facilities “ready to launch” as soon as it gained unrestricted banking authority. He also said Alex Bank was considering whether to roll out a form of “buy now, pay later” product.
“Credit cards are something Australians are starting to turn away from,” Fenwick said. “We think there’s better ways to deliver credit.”
