Australia has a new bank, with fintech Alex granted a restricted authorised deposit-taking institution (Restricted ADI) licence from the Australian Prudential Regulation Authority (APRA).
The digital bank has already been busy lending, writing more than $8 million in personal loans since it was founded in 2018.
The neobank has already raised more than $35 million from private investors and co-founder and CEO Simon Beitz, a former Suncorp exec, said the restricted ADI will mean customer deposits can fund loans and other credit products, while the interest paid can fund interest payments for savers.
“Being a bank is a privileged position in Australia and that’s why we’re building Alex from the ground up, based on smart banking fundamentals and a focus on lending to high quality banking customers,” he said.
“By solving Australians’ day-to-day credit needs, we’re helping customers get more of what they want in their life and creating a bank based on what people have told us is important: fast, simple, fair and human banking products and services.”
Alex is targeting around 3% of the prime consumer lending market with fast credit before scaling to offer a broader range of banking services. The business has processed more than 10,000 loan applications – which it says take just 180 seconds to fill out – in the past six months, with a decision provided within one business day.
Beitz said the fact that are no loans in the 90+ day arrears category is proof of the fintech’s tech capability and credit risk pricing.
APRA gave Alex a Restricted ADI licence, because it does not yet meet the regulator’s full prudential framework for ADI, but the CEO is ambitious to achieve that goal.
“One of Alex’s core principles is to make banking fairer. This includes giving customers the fairest interest rate possible across both savings and lending products, without hidden fees and nasty surprises,” Beitz said.
“We do this by using technology and processes that are fast and minimise friction and unnecessary risk. We believe we can provide some of the best products and interest rates in the market, without compromising customer service expectations, while still delivering a fair result to investors.”
The CEO said Alex’s lean, digital business model aims to achieve above industry average margins by targeting consumer lending funded by deposits.