On Wednesday, the regulator finalised its approach, comprising of stronger requirements to become a bank, and closer supervision of new entrants in the market.
APRA's three edicts mainly focus on sustainability of a new bank, rather than short-term profitability or popularity:
- Restricted ADIs must achieve a limited launch of both an income-generating asset product and a deposit product before being granted an ADI licence;
- There is increased clarity around capital requirements at different stages for new entrants, aimed at reducing volatility in capital levels and facilitating a transition to the methodology for established ADIs over time; and
- New entrants are expected to have a more advanced contingency plan to respond to financial stress, including an option to execute the ADI’s orderly and solvent exit from banking business.
APRA's revision follows Xinja's exit from banking in Australia, handing back all customer deposits in January, while Volt's savings account product is still in beta, despite being granted a banking licence more than two-and-a-half years ago.
Xinja once had one of the most competitive savings account products in the market, but without a loan product as an income generator it failed to meet APRA's capital requirements.
The brand also abandoned plans to launch a share-trading platform for US shares.
Investors in the company - now named 'Techstacked' - are also under criminal investigation by APRA in relation to capital raising tactics, according to Nine Newspapers.
Head Image: Xinja debit card. Source: Harrison Astbury