Find out what you need to know about digital banks to see if they will be right for your business.
The digital banking revolution is just starting to take off in Australia and it has already come to the small business sector. These new challenger banks, also called neobanks, plan to offer new digital solutions to solve the pain points of their customers and to do banking in a whole new way. This guide will show you what digital business banks are available in Australia, what kind of products they offer and how to decide if they are right for your business.
What is a digital business bank?
A digital business bank is not one that simply operates online. Instead, it is a bank built as a tech-focused platform designed to meet the needs of your business. These banks are usually branchless, so you will need to access all banking features through a device such as a tablet or smartphone. Digital business banks aim to create products that use technology and data that can help your business save time and money.
How is a digital business bank different from a traditional bank?
A traditional business bank may have an online presence, a smartphone app and even offer innovative products that use technology such as artificial intelligence or machine learning, but this does not make it a digital bank. These larger banks have legacy systems which can make product rollouts and changes slower. Digital banks are built with technology at the core of all of their products and services.
Traditional banks also tend to offer a wider range of products to their customers as they have been around for a longer time. They might also have a wide network of ATMs and branches, which, while costly for them, can be a huge convenience for their customers.
Digital banks do not have branches and you'll need to complete the majority of your banking within the platform. This reduced overhead, combined with other factors, allows them to continue to develop products and technology to release into the market.
What digital business banks are there in Australia?
The market is still developing, but the following digital business banks currently operate in Australia:
Judo Capital is an SME-focused digital bank that launched in 2018. It is currently waiting for a banking licence but offers a business loan, line of credit, finance lease, equipment loan and home loan.
Are digital business banks safe?
It's important to hold digital business banks to the same standards as traditional banks when deciding whether they're right for your business. While banks are required to hold banking licences, the organisations offering business-lending products may not. Digital business banks are not required to get a banking licence to offer business loans, home loans or prepaid cards. These "banks" are only required to get a banking licence when they start offering products such as transaction accounts.
While not all digital business banks are technically banks, check for other licences such as an Australian Financial Services Licence or an Australian Credit Licence. You can also see if they have a physical address, how easy they are to contact and if they display information about their company, fees and product disclosure statements (PDS).
How do I get started with a digital business bank?
Digital business banks are just starting to come onto the Australian market, so to get started, you can compare the products being offered by these banks and apply for them if they are right for your business. You should consider the same factors you would with a normal bank, such as whether they fit your business's needs and whether they are competitive when deciding if it suits your business.