Digital bank Xinja secures restricted authorised deposit-taking institution licence

As it gears up for a second equity crowdfunding campaign in January, digital bank Xinja has today received a restricted banking licence from the Australian Prudential Regulation Authority (APRA).

With the license in hand, Xinja is now calling itself Xinja Bank, and more importantly, can now hold up to $2 million in deposits of less than $250,000 each.

Xinja is the second digital bank to be licensed as a restricted authorised deposit-taking institution (ADI) after volt bank received its licence in May.

The restricted ADI licence, launched in May, is applicable for a maximum of two years before the restricted ADI must meet the prudential framework in full.

During this time, APRA stated, the restricted ADI is able to conduct “limited banking business while developing their capabilities and resources”, in effect “facilitating entry into the banking sector while not materially lessening entry standards that serve as important protections for the Australian community”.

APRA stated that the granting of a restricted ADI licence will “represent a tangible milestone for applicants at an earlier stage of the licensing process than would otherwise be the case”, in turn assisting restricted ADIs as they look to raise investment or bring on the expertise necessary to attain a full licence.

“As such, the restricted route plays a role in facilitating entry into the banking industry, potentially enhancing competition and outcomes for the Australian public,” APRA stated.

Eric Wilson, cofounder and CEO of Xinja, welcomed the news, saying it brings the company a step closer to fulfilling its purpose to “help people make more out of their money”.

“Xinja is all about making banking easy, frictionless and even fun so that people can make better, faster money decisions without the angst,” he said.

According to Xinja, more than 22,000 people have signed up for Xinja, with its app and prepaid card, which also works as a no-fee travel card, being used in more than 70 countries.

Having raised $2.7 million through an equity crowdfunding round on Equitise earlier this year, Xinja is looking to raise between $10 million and $20 million in its next capital raise, which will include a crowdfunding component.

Xinja and volt are just two of a growing number of digital banks launching in and from Australia.

Sydney-founded, California-based fintech Douugh last week announced it has landed a partnership with Mastercard that will allow it to roll out a ‘smart’ bank account linked to a Mastercard debit card in the US early next year.

The bank accounts will be powered by Choice Bank, following a partnership launched with the bank in late 2017. Partnering with an established bank means leveraging its banking licence to immediately provide customers with transaction and savings accounts rather than just a pre-paid card setup.

Melbourne-founded digital bank Up launched in October with this strategy, partnering with Bendigo and Adelaide bank to provide licensed financial products to its customers.

Image: the Xinja team. Source: Xinja.