Digital-only banks are creeping into the banking space, giving customers the ability to open accounts and begin transacting within minutes.
These disrupters, sometimes referred to as neobanks, are revolutionising how customers can manage their finances with the click of a button or by tapping their smartphone.
It’s a fierce attack on the banking industry, similar to what Uber did with taxis.
Up is among the new banks, launched in October, and co-founder Dom Pym said it now had more than 20,000 customers.
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“Smaller players can be nimble and respond more quickly to customer needs,” he said.
“The average time to sign up is two minutes and two seconds, you just need at least one form of identification.
“Within three minutes you could have Apple Pay up and running and literally be paying for something.”
The new disrupters include Xinja, Volt and 86 400 and are looking to compete with the bigger banks by grabbing a slice of their market share on deposit and lending products.
They have set out to offer low-cost and more tech-savvy products.
Daniel Vassilev, 22, said “the behaviour of the big four banks really was quite appalling” and this was one of the reasons he signed up with a digital-only bank.
“I’ve been aware of the challenger banks. In the UK and Europe they have them and I’ve been looking at it from a distance,” he said.
“I signed up within a few minutes and had Apple Pay set up so I could transfer money and use it straight away without needing a card.”
Many of the challenger banks operate at low cost with no account-keeping fees and no international transaction fees for jetsetters.
Xinja co-founder Van Le said it offered a prepaid tap-and-go card and was looking at branching into the home loan market.
“Customers have told us their experiences with other banks has been behind the times … they are backwards-looking instead of forward-looking,” Ms Le said.
“We believe money should be easy and not so hard to track where you are heading.”
Up: Backed by Bendigo and Adelaide Bank. Offers daily transaction and savings accounts.
Xinja: Has a restricted banking licence. Has 23,000 sign ups. Offers a prepaid tap and go card.
Volt: Has an authorised deposit-taking institution licence, products planned to come in 2019.
86 400: Backed by Cuscal. Planning to offer products in 2019.
Judo: Offers lending only to small and medium businesses.