Xinja Bank

Market inefficiencies

It is evident Australian customers are continuously losing trust in major banks due to lack of information transparency. Further, it is unable to cater customers’ financial needs and deliver customer-centric experience. Moreover, the big 4 banks in Australia (Commonwealth Bank, Australia New Zealand Bank, Westpac, and National Australia Bank) neglect customer interests. Above all, its acts highlight predatory loans, reckless practices, manipulation in interest rate benchmarks, and inappropriate financial advice. According to BBC News, Australian banks paid over US$ 780 million in penalties and compensation since the 2008 financial crisis.

Introduction

The strategic intent

The bank’s members include Eric Wilson (Founder), Van Le (Chief Strategy & Innovation Officer, Executive Board Director), John Pountain (CTO). Xinja Bank secured an unrestricted ADI license to conduct full banking operations in September 2019. Xinja focuses on personal banking becoming the 1st virtual bank to do so, and they’re partially financed through equity crowdfunding.

Xinja’s 2-S framework analysis
1. Scalability
-: Growth

Xinja bank since its launch of services has attracted AUD$ 400 million in deposits with over 45,000 active customers. It offers a 2.25% saving account interest rate to its Xinja stash account for balances up to AUD$ 245,000. However, Xinja has stopped taking deposits from new customers as the demand for the stash accounts increased unexpectantly, resulting in a hard-hit on interest costs.
Xinja’s stash account primarily separates the daily spending money from the transaction account for saving purposes.

“When faced with higher than expected deposit flows, and an RBA rate cut, most banks would just drop deposit interest rates, hurting existing customers while chasing new ones. That’s not what Xinja is about. We are holding our rate steady, at 2.25%, but hitting the pause button on customers opening Stash accounts.”
Eric Wilson, founder

-: Funding

In March 2020, Xinja bank has received AUD$ 433 million funding Emirates World Investments for supporting its growth in the next two years. The funding is to be released in two-parts with the first AUD$ 160 million upfront and the remaining in the span of two years.

2. Strength
-: Technology infrastructure

Xinja has collaborated with SAP SE to implement its SAP Cloud for its Banking platform. This is to drive a simple, agile solution that delivers rapid customer onboarding. Further, it provides real-time risk and financial assessment, as well as enabling open banking capabilities.
As stated on its official website, Xinja pays emphasis on security strategy and its design, with an emphasis on Zero Trust Architecture (ZTA). Built upon the Zero Trust principle of “never trust, always verify”, Xinja’s security systems are designed in ways as if they don’t trust each other – if the security of one part of the system gets compromised, it won’t move to the next layer – so that there would be no potential for cross-contamination when data breaches occur. This reassures its customers for
safe information exchange and built loyalty toward the bank for making deposits.

-: People infrastructure

The Xinja team comprises of professionals from varied functional and industrial backgrounds that includes, banking and finance professionals, human centred design, customer experience, marketing, technology experts.

Actionable lessons learned from Xinja Bank
  1. Identify the pain points in the respective geographic market to serve the right segment of customers rather than mimicking a successful virtual bank model from another region.
  2. Partner with the right set of technology and service providers to create a robust technological Infrastructure and security measures.
Topic:

The Future of Banking

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