Avenue Bank Latest Neobank Aspirant Approved by APRA
(13 September 2021 – Australia) The Australian Prudential Regulation Authority (APRA) has granted a restricted authorised deposit-taking institution (RADI) licence to Sydney based Neobank Avenue as a non-operating holding company.
The digital business bank, headed up by CEO George Confos and founded by Dale Hurley and Colin Porter who previously founded CreditorWatch, has a stated focus on cash flow finance with rapid pre-approvals within two business days and extending finance to businesses without putting up their residential property as security. Avenue has developed a cloud-based digital process that can achieve rapid decisions to grant pre-approved limits that will allow customers to draw down on funds when they are required.
Avenue Bank also announced the addition of Steve Kinsella to its executive team after holding previous roles of CFO for business and private banking, head of finance for BankWest, CFO for CBA Institutional Banking and significant overseas experience with senior finance roles at ABN AMRO.
The RADI designation allows Banks conduct limited banking business while developing their capabilities and resources over two years before they must meet the minimum prudential regulations in full. A full public launch is expected within a year once a full ADI licence is attained in that APRA has approved Avenue Bank to enter the Australian banking sector without “materially” reducing entry standards following the entrance of Alex Bank in Q3 2021 and noting the failed recent bid by digital bank Xinja to gain a foothold.
APRA halted ADI approvals in Q2 2020 to allow the prudential regulator to focus on its COVID-19 response, delaying Avenue’s launch plans until now.
Other business banking aspirants are planning to follow first mover Judo Bank, granted an unrestricted licence in 2019, Avenue and payments terminal provider Tyro which was granted a banking licence in 2015. ASX-listed Novatti is waiting for APRA to approve it as a bank as it seeks a strategic partner after acquiring a stake in Reckon, which makes practice management software for the allied health sector. Payments start-up Zeller also has aspirations to become a business bank.
Restricted ADIs are subject to a deposit limit of A$2 million on the aggregate balance of all protected accounts, and a deposit limit of A$250,000 on the aggregate balance of all protected accounts held by an individual account holder. It group will offer products and services purely online and will have no branches.
“Avenue Bank will offer unique funding opportunities at a time when businesses are still suffering from the ongoing impacts of the COVID-19 pandemic. Avenue Bank will inject some much-needed assistance into the traditionally underserviced SME banking sector, at a critical time. Small business is the growth engine of the economy, and they need finance to grow. We are laser-focused on cutting-edge credit decisioning capabilities to get good businesses the funding they deserve, and quickly, without putting up their home as security” commented Avenue Bank CEO George Confos.
“Our mission remains the same and we aim to explore more ways to leverage our status as a bank, offering unique services in the market, upon becoming an ADI. Avenue’s innovative and digitally enabled product suite will deliver a much-needed cash injection to help Australian businesses. We’re solving real problems for real people, focusing initially on small and medium sized enterprises. The impacts of the COVID-19 pandemic have made our value proposition even more pronounced, particularly as government support schemes run off and business activity slowly picks up” Confos added.
“We’ve created a credit assessment algorithm that we can industrialise. This is truly unique and proprietary to Avenue Bank and sits nicely with our CreditorWatch pedigree. In all my experience, big banks focus on retail customers, or big businesses with large amounts of lending at term. But the guys in between are overlooked. They end up being in the retail bank, having given their home as security, or they end up in the business bank, where the banker doesn’t have time to analyse the credit or get involved in relationship management. So, they get neglected: they end up being ping-ponged between the retail and business bank. We want to be a specialist, SME working capital provider” said Mr Confos.