86 400 chairman on the challenge facing Australia’s digital banks
Where Australia's digital banks can succeed and where they might fail.
Chairman and co-founder of neobank 86 400 Anthony Thomson believes Australia's Big Four banks have lost sight of the customer. Speaking to co-founder of Finder Fred Schebesta on Finder's business show The Disruptors' Club, Thomson said that profit comes as a result of doing something great for the customer, but Australia's major banks think they are just in business to make money.
"And I think that's a great opportunity," he said.
Thomson is currently launching his third bank, 86 400, in Australia. He previously launched challenger banks atom bank and Metro bank in the UK. 86 400 is currently waiting for its full banking licence from the Australian Prudential Regulatory Authority (APRA) but has announced a broker partnership and debit cards in beta testing.
Thomson discussed the challenges of new banks disrupting traditional models with Schebesta and Chris Skinner, global financial expert and author. Skinner says what tends to happen with neobanks is they have great ideas and vision, but they don't have customers or history and therefore don't have trust.
"So the challenge is, how do you get customers to switch to trust you when you haven't got any history and you haven't got any trust. It grows over time," Skinner said.
According to Skinner, many neobanks focus on becoming customers' second choice bank because of this. Then over time, neobanks intend to retain customers by serving them better than traditional banks.
"But so far, it's a challenge to actually get any breakthrough," Skinner said. "Probably the biggest breakthrough that I've seen in terms of new banks is something like Marcus. But that's come from Goldman Sachs. And that's because they have, obviously, a big investment bank history. But we are seeing some successes in UK challenger banks. And I think we'll see some here in Australia."
Thomson believes Australia's neobanks have a clear challenge.
"They've got to establish that they're competent because nobody's seen them. They've got to establish that they have your best interest at heart. But at least in that place, we start ahead of the existing banks because everybody's convinced – and I think the Royal Commission has proved this – that consumers don't believe that the banks put them first."
You can watch the full interview above. Part 2 of the interview will be available Monday 17 June 2019.