To be fair to Australia, it did recognise early that if a fintech company is providing banking services it must be considered a bank. But so that Noo Finance gained a leg up, participants in that market would be granted a period of light regulation: that was necessary because markets such as Singapore had grown its fintech market rapidly with its so-called “Regulatory Sandbox” which did not define those delivering banking services as banks and allowed them to develop with close to zero regulation beyond that applicable to any company incorporated and trading in Singapore. Again, I should be fair: that means that start-ups can focus on developing their tech and their business. That’s good. It also means that when they start operations and must comply with, at least, a light version of financial services regulation, they have built a finance company with no, or very little, culture of financial services regulation. That’s not just bad, it’s idiotic and downright dangerous for consumers.
“86 400 is a digital bank headquartered in Sydney. 86 400 does not operate a physical branch network, or online browser-based banking facilities, with the key customer interface being the 86 400 smartphone application”, says ACCC, going on to say that the company has less than 0.1% of the home loans and household deposits in Australia and “86 400 has offered online transaction and savings accounts since September 2019, and launched a home loan product sold through a network of selected brokers in November 2019.” So, it doesn’t have branches but it’s outsourced a major part of its operations to businesses that do have some kind of physical presence somewhere and which, incidentally, are regulated with an Australian Financial Services Licence.
Hang on… back up… run that by me again, This paragon of Noo Finance has one tenth of one percent of the market and it’s considered an important “disruptor” by the regulator for the whole Financial Services Industry including the protection of the other 99.9% of the industry’s customer base? Seriously? It’s so important that its “disappearance from the market” (to use ACCC’s own language) had to be investigated? It’s like Hungry Jacks having to seek permission to buy out a tiny village baker.
“86 400 is majority owned by Cuscal Ltd, one of Australia’s largest independent payments providers,” says ACCC.
Cuscal is an example of a business that has successfully placed itself at the centre of a so-called disrupted financial sector; a sector that should be called “fragmented.” It has become a company that creates order out of the chaos that has been caused by the nail-bomb effect of rampant Noo Finance growth.