Small business lender Avenue is off its banking P plates

Sydney fintech Avenue Bank has been granted a full banking licence by the financial regulator APRA.

Avenue has been on what’s known as a a restricted Authorised Deposit Taking Institution (ADI) licence since mid-2021 after raising $37 million in a series B earlier that year.

The granting of a full ADI by the Australian Prudential Regulation Authority (APRA) is around 18 months behind the neobank’s original schedule.

No doubt the closure of neobank Volt in mid-2022 after five years, having failed to secure additional capital, as well as Xinja in December 2020 after burning through $70 million in investor funds, has led both the regulator and fintechs involved to hasten slowly towards success.

The last few years, following the initial neobank thrill, has been one of closures and consolidation.

Dom Pym’s Up Bank and parent company Ferocia was sold for $116 million to ASX-listed Bendigo and Adelaide Bank in 2002, and 86 400 was acquired by NAB in January 2021.

Prior to Avenue scoring a full ADI, Alex Bank is the most recent fintech granted a full lience, back in July 2021.

Avenue started out looking at the small-medium business lending territory dominated by Judo Bank and fintechs such as Prospa, but in late 2022, the fintech’s chief operations, product and marketing officer, Peita Piper was elevated to the CEO role and the bank narrowed its focus to a niche part of business banking; securing bank guarantees for landlords – a $9 billion market. 

Piper said the fintech’s research found that 29% of businesses have had to defer an office move, and for nearly half (46%) the key issue was the process of obtaining a bank guarantee.

A typical bank guarantee is worth around $125,000.

Avenue is backed by Sherman Ma’s Liberty Financial Group. The fintech was cofounded by Colin Porter and Dale Hurley, the duo behind credit reporting bureau CreditorWatch, which they sold after six years in 2017.

Among Avenue’s early adopter fans is Tank Stream Labs CEO Bradley Delamare.

“I went through the traditional bank guarantee process, and it was painful,” he said.

“Not only did I have to obtain multiple signatures for multiple documents, but I also had to hand deliver them to the bank’s head office. In the 21st century, surely there’s a better way.”