Banking on change: Why neobank 86 400 wants to take the fight straight to the big four

The chief executive of one of Australia’s newest digital banks says his startup has no desire to be a smaller “niche” bank, planning to take the fight straight to the big four once awarded a full banking license.

Robert Bell heads up 86 400, one of Australia’s aspiring neobanks which sprung up after the rollout of the open banking regime, hoping to capture customers disenfranchised with the bigger banks.

The company was spun out of Australian payments giant Cuscal, who decided last year it wanted to get some skin in the digital banking game, and was frustrated by the lack of Australian banking options which effectively used the modern technologies available to them.

“So fast-forward to about 12 months ago, they decided to start a new bank. I subsequently became CEO and was tasked with building that bank,” Bell tells StartupSmart.

Though some may baulk at such a task, Bell was well-equipped, having worked with ANZ for nearly 15 years as its chief of staff, and then as its managing director for the bank’s Japanese operations. Bell says while he learnt invaluable things at ANZ, working on 86 400 has given him the chance to build something while not being “constrained by bureaucracy”.

Over the past 12 months, the neobank has scaled from eight employees to 80 and is currently in the process of getting a full, unrestricted banking licence. If awarded, 86 400 would be the second neobank in Australia to be awarded one, after Volt was awarded one earlier this year.

This means 86 400 is firmly in the race to become Australia’s first and most successful digital bank, hustling against competitors such as Volt, Up, and Xinja. However, while Bell recognises the competition in the neobank space, he says they’re not who the startup has its eyes on.

“In terms of competition, we view the four large major banks in Australia as our main competition, as they have 85% of the market share. We want to provide better service to customers than the big four banks. That’s what we’re laser-focused on,” he says.

“There’s a number of other competitors in our space such as the Volt team, who are incredible, they’ve done well to get their licence. To the extent there are two or three neobanks in the marketplace, that competition will be helpful, and it will drive awareness of digital banks as alternatives.”

“It will provide the innovation in the market that we’ve been desperately missing.”

Licence in the works

While Bell is reluctant to count his chickens, the chief executive is confident in 86 400 receiving its banking licence soon, saying the startup chose to aim for a full licence straight off the bat and skip the restricted licence stage, which will allow it to offer a full product suite on launch.

And though the company can’t let retail consumers on board yet, Bell and his staff have been using 86 400 for the last few months, meaning the company intends to launch its product very quickly once given the green light from APRA, Australia’s banking regulator.

Bell says a number of local companies have applied for full banking licences, and he believes not all of them will receive one, noting building a bank is “very capital intensive” and requires building a lot of infrastructure.

“We’ve got a really strong, digitally native team here, and though Cuscal is our major shareholder, we have an independent board with Anthony Thomson, co-founder of the UK’s first digital bank Atom as the chairman,” he says.

“Working at ANZ taught me while you can’t build a bank without banking experience, you can’t build a new bank without tech experience. If you want to be at the forefront of tech, tech needs to be at the forefront of your business, it can’t be a department somewhere else or something you add on later.”

Royal commission no big win

Though you might think Bell would be rubbing his hands in glee over the recent smackdown on the big four in Australia’s banking royal commission report, the chief executive says business is much the same as usual.

“People always ask us if we got 86 400 going because of the royal commission, but it wasn’t the reason. Our view on customers needing an alternative to the big four banks hasn’t changed, the royal commission just highlighted that publically,” he says.

“Australians deserve a different type of banking.”

86 400 is hoping to launch soon — Bell would give no solid timeline — and offer customers transactional and savings accounts immediately on launch, along with some “surprising” new features in the app.

Within a few months of launching, the bank also hopes to offer home loans to its customers, along with “competitive” interest rates which it will offer with as few strings attached as possible, says Bell.

Additionally, business banking will eventually be on the cards further down the track.

“We have no ambition to be a small, niche bank — we want to be a genuine alternative for Australians,” he says.

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