The Melbourne regtech powering Australia’s new digital banks
FrankieFinancial has now signed deals with Xinja and Novatti Group.
A Melbourne regtech company has said it is working to provide the tools to power Australia's neobank boom. After starting life as a challenger bank itself, FrankieFinancial, now a financial systems aggregator and "regtech" (regulatory tech) company, has already announced two deals with Xinja Bank and Novatti Group.
The deals will see FrankieFinancial provide Xinja and Novatti with their financial systems platform, bringing together multiple sources such as Experian and LexisNexis to provide a single platform view. These financial systems are incredibly important to new banks; it's largely the lack of big bank legacy systems that allow them to move quickly and develop new products for their customers.
Both Xinja and Novatti group are well-placed in the "new bank" category. Xinja received its restricted banking licence in December 2018 while Novatti expects to receive its restricted licence later this year. The restricted licence was introduced by the Australian Prudential Regulatory Authority (APRA) in May 2018 and allows financial firms to conduct restricted banking business for two years while they build their capabilities and resources. The first recipient of this licence was Volt Bank in May 2018.
FrankieFinancial CEO Simon Costello said inefficient data and legacy technology come at a significant cost to banks and cause customer dissatisfaction.
"The rise of neobanks in Australia has been led by consumers' dissatisfaction of banks being unable to do seemingly basic tasks. Customers who apply for credit cards or mortgages are often frustrated when the bank asks for a 100 point check and statements even when they've been a customer for 15+ years," he said.
"It's not that banks aren't aware of these inefficiencies or poor customer experience; it's that they're hamstrung by legacy systems that don't communicate well, store data in silos and are expensive to maintain. According to Ripple Insights, globally, 70% of banks' IT budgets are spent on maintaining legacy systems."
Xinja Bank CEO Eric Wilson said the neobank was excited about using FrankieFinancial's platform to maintain its zero legacy state.
"Connecting the best of breed technologies and reducing cumbersome interdependencies to ultimately service our customers better is perfectly aligned with Xinja's mission."