Even as the COVID-19 pandemic rages affecting businesses the world over, Australian neobank 86 400 has revealed closing the Series A funding bringing its total equity capital to $90 mn.
In a statement released, CEO of 86 400 Mr Robert Bell said: “The funding announced today means we can keep our foot firmly on the accelerator, continuing to build out both sides of the ledger and help even more Australians take control of their money.”
Sounding confident of the growth ahead, Mr Bell said “We’re bringing products to market faster than any other bank in Australia, digital or otherwise”
We’re bringing products to market faster than any other bank in Australia, digital or otherwise
Robert Bell, CEO of 86 400
The new-gen bank claims to have more than 170,000 accounts on its platform and sees more than 350,000 transactions and balance updates each day.
Mr Bell also revealed 86 400 could hit 500,000 accounts in the next 12 months. “Of course, that will be balanced by growing the lending side of our business and we anticipate having a mortgage book of close to $2bn by the end of 2021.”
Rapid growth supported by new product addition and customer feedback
Since the launch in September 2019, 86 400 has released seven products in six months and expects to deliver a further three by the end of 2020. It is the only retail neobank in the Australian market to offer home loans and shared accounts (currently in pilot).
We don’t think it unreasonable to see ourselves as Australia’s most advanced neobank.
86 400 also revealed more than 7,000 pieces of feedback have gone into developing their products and experiences already in the market. Although there are questions on the validity of Net Promoter Score as the only or key measure of customer satisfaction, 86 400 is tracking its NPS which is currently at a whopping 46. In comparison, the big banks have an average NPS in single digits.
Macquarie Bank, Suncorp and CBA are some of the leading financial institutions tracking NPS as an important yardstick to measure client satisfaction and advocacy.
Its rapidly expanding broker network and current mortgage book of close to $20m are expected to grow significantly in the coming months, as 86 400 partners with further broker partners. Brokers and borrowers are drawn to 86 400’s competitive mortgage rates and rapid approval process. No wonder the challenger bank is targeting $2bn mortgage book by the end of 2021.
Fintech disruption
Basic banking services with attractive rates and high availability is a compelling value proposition the established players could find difficult to match. So the big banks have been adding new features to their current services.
NAB announced a new feature to restrict gambling transactions on its app. Commonwealth Bank has been on a transformational journey leveraging technology to deliver better banking services via its app.
In yet another reminder of the disruption by the neobanks, Bank of Queensland announced its aims to become a neobank focusing on delivering digital services aggressively with a 5-year Capex investment of $440mn.
While the big banks have been grappling with the after-effects of the Banking commission report, the neobanks are not only entirely digital but also offering Australians the best way to save money.
Appealing to the so-called Millenials and digitally savvy customers, the challenger banks have shown a lot of promise gaining customers’ as well as investors’ confidence.
The latest funding round closed by 86 400 is a reflection of that promise and the dawn of new reality. The big banks better watch out!
