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Aussie neobank race heats up as 86400 sets sights on whopping $250 million raise

Stephanie Palmer-Derrien /

86 400

86 400 chief executive Robert Bell. Source: supplied.

Neobank 86400 is setting out on what could become one of the biggest capital raises in Australian history, targeting a whopping $250 million in new funding.

The startup, currently fully backed by payments solution provider Cuscal, plans to close the round towards the end of 2019, and will use the funds to support it through its next phase of growth.

Founded in 2016 and run by former chief of ANZ Japan Robert Bell, and Cuscal chief information officer Brian Parker, 86400 is currently running in a pilot mode.

Over the past two years, it has used Cuscal backing to invest in building its proprietary technology, and now has its app and customer experience engine in testing phases.

It is currently waiting for its application for a full banking licence from the Australian Prudential Regulation Authority to be approved and plans to launch its transactions and savings accounts later this year.

“But that’s just the beginning for 86 400. We are developing products and services designed to help our customers out, not catch them out, making it easier than ever before for Australians to manage their money,” Bell said in a statement

If the neobank raises its target investment, this could become the second-biggest startup raise in Australia’s history, a title claimed by Campaign Monitor’s $266 million raise in 2014.

Small-business lender and fellow aspiring challenger bank Judo Capital secured $140 million in August last year and has since received its full banking licence from APRA and rebranded to become Judo Bank.

In other significant recent raises, fintech Airwallex closed a $100 million round to become the latest Australian unicorn, and Deputy raised $111 million.

Elsewhere in the great neobank race, Xinja raised $2.6 million in March this year, beating its own record to bag the biggest equity crowdfunding round Australia had ever seen — even if its hold on the title was somewhat short-lived.

Xinja is also still waiting to have its application for a full banking licence approved, but founder Eric Wilson told StartupSmart in January he welcomes a bit of healthy competition.

The idea here is to revolutionise the Australian banking industry, he said.

“And the best way to do that is to have a bucketload of competition.”

Also in January, Volt became the first of the neobanks to secure its full banking licence, in the same week as it secured $8.4 million in investment from ASX-listed Collection House.

Unlike some of its Aussie peers, Volt has not released any beta products or even teasers as to what it’s up to, preferring to operate under the radar.

Speaking to StartupSmart in January, co-founder Steve Weston said the strategy is to come to market with a full range of capabilities, and when they can show what the startup can do, rather than shouting about it.

“We’ll talk about it when we have something very close,” he said.

Finally, Up became the first neobank to launch an actual product into the market in October last year, with a partnership with Bendigo Bank meaning it could bypass the lengthy banking licence application process.

At the time, co-founder Dom Pym promising technology-led banking, rather than banking-led technology, and despite a PR mishap earlier in the year, when one of the founders was called out for trans-phobic behaviour, it continues to add new features, and claims to have “thousands” of users on board.

NOW READ: Viva la neobank: Big banks might be ignoring the meteor, but extinction is inevitable

NOW READ: Australians are embracing fintech as they move away from traditional payment solutions: Research

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is the editor at StartupSmart. You can contact her at [email protected].

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