NAB buys neobank 86 400 for $220m, plans to merge with UBank

author-avatar By on January 29, 2021
NAB buys neobank 86 400 for $220m, plans to merge with UBank

Big four bank NAB announced it has acquired neobank 86 400 in order to accelerate the growth of its digital subsidiary UBank.

The $220 million purchase is expected to be completed by mid 2021, subject to approval from the Treasurer, the Australian Prudential Regulation Authority (APRA), and the Australian Competition and Consumer Commission (ACCC). 

UBank and 86 400 will continue to operate as separate businesses until the transaction is finalised. 

Chief executive of 86 400, Robert Bell, said he was proud of what the neobank had achieved in such a short period. 

“Over the past 18 months, we’ve challenged the status quo of banking through innovative products, services and technology," Mr Bell said.

"86 400 and its customers will benefit from NAB’s capital and balance sheet strength and investment spend to support accelerated growth and continued innovation, helping even more Australians take control of their money.”

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

In an email to customers, 86 400 said day-to-day, nothing would change and no action was needed. 

"You'll continue to be an 86 400 customer, bank using the 86 400 app and make purchases with your physical 86 400 card or connected Apple Pay, Google Pay, or Samsung Pay wallet.

"You can also expect the same rapid rollout of smart products and features that you'll be used to as an 86 400 customer."

It's unknown what savings account interest rate 86 400 customers will receive when the acquisition is approved, or whether the 86 400 brand will remain. 

"We’ll continue to have competitive rates and fees, but with even greater scale, enabling us to help even more Australians take control of their money," Mr Bell told Savings.com.au.

"While we are still working through some specifics such as the combined business name, our intent is for the look, feel and experience to reflect the best of both businesses."

Just over a month ago, 86 400 was boasting $200 million in home loans, with Robert Bell stating in July the bank wanted $2 billion in loans by the end of 2021. 

With Xinja's infamous collapse in December and the sale of 86 400, it's a challenging time for the neobank sector. 

Up Bank, a digital subsidiary of Bendigo and Adelaide Bank, boasts 300,000 savings account customers but is yet to launch a home loan product. 

Meanwhile, other notable entrant to the sector, Volt, launched in late 2019, is yet to launch a product. 

But Mr Bell said the partnership with UBank would dramatically accelerate growth and help even more Australians reach their financial goals. 

“Coming together with UBank gives us the scale, funding and capital to dramatically accelerate our growth and reach even more Australians with our smarter approach to banking,” he said.

UBank chief executive, Phillippa Watson, said UBank had a proud history of innovation, which would only be strengthened through its partnership with 86 400.

“Combining with 86 400 will bring together UBank’s established business and 86 400’s experience and technology platform to help us meet the changing needs of our customers," Ms Watson said.

"We are looking forward to having the 86 400 team join us to help deliver the next generation of simple, fast and mobile banking solutions.”

UBank launched what may be Australia's lowest advertised home loan rate just a week ago, offering a three-year fixed home loan rate of 1.75% p.a. (2.22% p.a. comparison rate), for owner occupiers paying principal and interest. 


Image source: 86 400

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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