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Why Up bank hasn’t launched a credit card or mortgage, yet


Up bank debit card

Digital bank Up says a credit product is on the horizon, but it won't be launching one any time soon.

Today marks digital bank Up's first birthday, after officially launching to the market one year ago. One year on from launch, the local digital bank has gained more than 130,000 customers and has seen more than $650 million flow through the product. Up also has more than $150 million worth of deposits, with this figure growing daily.

Interestingly, the bank has done this without offering any credit products, which are widely known to be the key money makers for traditional banks. Currently, the Up app offers an everyday transaction account and a linked savings account. It doesn't offer any credit products; however, while speaking at Melbourne's Intersekt today, co-founder Dom Pym said that wasn't the plan to begin with.

"When we were first talking with our stakeholders about launching this new of the things we set for ourselves as a goal was to get 30,000 customers in the first year. We killed that.

"The other thing was that we were going to launch a credit product. We thought that in our first year we'd launch a credit product, like a credit card or mortgage, as well as a deposit product. But what we've found is that the credit market is not only very competitive but it's also a bit predatory. For us, we decided it was not the right approach," said Pym.

Pym said the reason the bank hasn't launched a credit product, and why it doesn't plan to in the near future, is because of its customers.

"As it turns out, our largest age group of customers is 16 to 24. A lot of those customers are not ready for a credit card and they don't want a mortgage yet. So when we first put together our business plan and had a credit card or a mortgage in the mix, it looked really good on the spreadsheet. But actually in reality, it doesn't fit who we are."

Pym said the bank hasn't ruled out launching a credit card or mortgage entirely, but it won't rush to launch a credit product until it meets the needs of its customers.

"For us, it's not a three-year plan where we make some money and exit. For us, it's a 100-year plan. If we're now working with 19-year-olds to 24-years-olds, in 10 years they'll be needing a mortgage. In another 10 years, they'll be needing superannuation. For us, it's about having longevity with those customers and helping them through their entire life cycle."

In comparison, fellow neobank 86 400 has also initially launched with deposit products but has made it clear that it will be launching home loan products. Xinja, which was granted its full banking licence last month, currently has a home loan product in beta which it plans to launch publicly next year.

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