Competition is heating up amongst the new banks (neobanks), who are all vying for the attention of early adopter millennials. You may have seen their brightly coloured ads on bus shelters and at your local train station.
What the heck is a neobank and do I need one?
A neobank is an online bank. It’s completely digital. There are no physical branches customers can visit to deposit or withdraw money, or to meet a bank manager.
The lack of a physical branch may be a deal breaker for some potential customers, but neobanks probably aren’t targeting those people anyway.
The neobank proposition is to provide banking via an app that is beautifully designed, easy to use and track your spending and give a superior customer experience.
These Apps are really setting the new benchmark for what a banking app should be, and shows just how far behind the big 4 really are.
Neobank road test
We decided to road test the main neobanks and enlisted the help of Lyndon Maher, product expert and consultant to Stockspot. Lyndon is a loyal, dyed in the wool CBA customer. Like many Aussies he’s been a customer from Dollarmite days (over 30 years!).
Lyndon, who is not a millennial said:
“I wanted to see what all the fuss was about with these new digital first, mobile app banks and from trying them, could I be tempted to switch from CBA.“
“Are there any ‘oh wow’ moments from these new banks? Are they more than just fancy packaging and a colourful card?”
Here’s our in-depth review of how we found the neobanks to compare:
Research was started on 3 October, we chose to review:
We wanted to try Volt and signed up for early access. Last update from Volt was December 20 to say I’m 42,453 in the line to get access to Beta.
Skip ahead here to skip to our verdict and table comparison of the Neobanks.
Consistent Experiences
- Security: all 4 neobanks seem focused on security, this is important to build trust with customers. They all verify identity, and employ the use of pin codes, face ID and two factor authentication.
- Signup: They all claim you can signup for an account in under 5 minutes. In reality it takes a longer time before you’re ready to use your new bank app, but you’re ready to go in under 15 minutes, which is still a huge step change when compared to the traditional banks.
- Beautiful design – there’s also a clear focus on beautiful design within the app and the physical card. The neobank cards are colourful and highly engaging from the packaging to the card themselves (Up also send some fun stickers).
These eye catching cards gained the attention of shop and cafe staff. “Oh that’s cool, what’s that card” was heard several times when I used them to pay both on apple pay and with the physical card.
- Delivery – the physical cards all arrived within 7 days of being ordered.
- International fees – these are the hidden fees you probably get hit with from your current bank and don’t realise it. These are international ecommerce or software subscriptions that are charged to you in a foriegn currency may be showing up on your statements. All the neobanks were transparent about how much they charge (if at all) on international fees, which can’t be said for traditional banks.
Up
Up is part owned by Bendigo and Adelaide Bank. According to its 2019 annual report Up was launched in October 2018 and over 100,000 customers have joined, with 50 percent aged 16 – 24, making 5.1m transactions. Clearly a new demographic being captured by the bank.
Signup
Instant sign-up, no annoying wait lists! Within 15 minutes my everyday transaction account was created. A digital Up card was added to Apple Pay and a savings account was created. I transferred money into my account and could make a purchase via eftpos using Apple Pay on my iPhone. It felt like everything happened quickly and in real time.
There’s no onboarding guide, or walkthrough to how the app works, but it’s very intuitive and easy to figure it out for yourself.
There’s loads of information on their website and I felt like I had a good idea of what to expect.
Transaction and spend tracking
With Up you can use PayID to transfer money immediately. You get an instant notification from Up when the money hits your account. This feature is (currently) unique to Up. I transferred $100 from CBA to Up in real time using PayID.
Future transfers are easily setup with BSB / account number and it clears in realtime into Up via Osko.
Up give their users (or ‘Upsiders’ as they call their customers) a monthly summary screen. These are a useful (scary) report on your spending. It’s similar to the screen time reporting Apple shows you each week for your screen time usage.
The weekly summary notification is a good way to keep across your spending habits. You can click on a business you’ve been spending at to see all the transactions, which is cool, but also frightening how much I spent on coffee at one cafe in October!
App design
The Up app is aesthetically well put together. There’s obviously been a lot of thought and attention put into it.
The design and tone of voice seem targeted at a younger millennial, snapchat (do millennials still use snapchat?) generation.
The transaction history design is nice. In most cases a business logo is shown and the business name (not some obscure trading name), making it easier to identify transactions.
The animations and design throughout loading states of the app are delightful surprises, an area they could have easily overlooked.
Their product roadmap is public on their website – amazing transparency for a bank and exciting to get a sneak peak into their plans.
The card
The card design is unique. It’s a clear statement that Up is a digital age bank that thinks differently. However, the unique design with no credit card numbers shown on the front has meant it’s been a little annoying when trying to scan your card via the camera into the Uber app to setup payment and it doesn’t work. The tiny credit card number shown on the back of the card has also made it harder to read when reading and entering in the numbers manually.
Savings
The app has a neat savings round up feature the rounds up your spend on each transaction to make a small deposit to your savings account. A fun feature I stumbled across was you can pull down and release on your spending account screen to transfer $1 into your savings (or the remaining cents in your account). Also offers 2.25% interest rate.
Notable pros:
- Onboarding smooth and well thought out design and experience.
- I actually dropped and lost my Up card and someone called Up to report it. Up cancelled my card and re-issued a digital card within 10mins. It was an amazing customer experience that I can’t imagine any of the big 4 banks having the ability to recreate anytime soon.
- Multiple “Savers” can be setup for saving for different goals.
Cons
- As beautiful as the card design is, functionally the layout of the card means apps like Uber on your phone can’t scan the card to use in payments. It’s a bit of a pain and perhaps where design comes first over practicality.
- Not the best savings account terms on offer compared to the other Neos.
86400
86400 calls itself Australia’s first smart bank, one that’s fit for purpose for today’s mobile world. This digital bank is backed by a company called Cuscal, Australia’s largest independent payments company.
Signup
This one was a little confusing. There was limited information on the 86400 website compared to Up.
I felt I had to sign-up to really understand what the product will offer, which is annoying.
They offer instant sign-ups (ie no wait list). They claim you can be up and running in two minutes, this is unlikely even for the fastest keyboardist, but definitely within 15 minutes.
ApplePay was easy to add and setup. Winner – same as Up. No drama there.
Transaction and spend tracking
You can give 86400 access to your other bank accounts to gain a single view of your various accounts and transactions in one app. Most major banks are listed and easy to connect, interestingly Up, Xinja and Revolut are not included!
The app can then predict future upcoming bills based upon your transaction history from your connected bank accounts for up to 200 companies.
Transactions aren’t shown in realtime, there’s a delay of about 1 hour.
App design
86400 has a fresh modern design and tone of voice that would appeal to most demographics, not just millennials.
The card
The card is a pleasant light aqua, nothing really stands out. It’s probably the least interesting of the 4 neobanks I trialled, which isn’t necessarily a bad thing but didn’t get the same reactions from people when I used it.
Savings
86400 also offers savings on balances up to $100,000 at a bonus rate of 2.25%, which is better than you get a most banks.
Home Loans
They have just become the first Neo Bank to offer home loans, however you will need to go through a broker.
Notable pros
I connected my 86400 and CBA accounts and I can see upcoming bills for my linked accounts, which is pretty handy. This could help with managing your future cash flow; I didn’t need to set up payments from 86400 which was handy.
First Neo bank to offer a home loan with next to no paperwork required – a truly digital first experience.
Cons
It’s not overly clear what happens to your banking data if you want to cancel the account.
Money transfers are a bit clunkier compared to Up, I had to use my BSB and account number to get money from CBA across into 86400. It’s not instant like Up and there’s no notification once it had cleared, which was under 24 hours for the first transfer. Following transfers happen immediately which is great, but no mobile app notification is shown.
Xinja
Xinja has been the most talked about of the neobanks. It sells itself as independent, which means it isn’t backed by a big financial institution. It carried out two large equity crowd fund raising rounds which was a clever way to raise its profile with potential customers.
Signup and deposit
I had to join a waitlist before joining, and waited 7 days before receiving an email. If I wasn’t trialing the product I’m not sure I’d be happy to wait this long. The waitlist has since been removed and it’s now possible to join immediately which is fantastic.
I wasn’t overly impressed with my onboarding experience compared to the others. Once they said I could join, it seemed like I had to signup all over again! Why not pickup from where I left off? Xinja says it’s for security but it wasn’t clear why.
Also the PIN number security was harder than my iPhone! They insist on a 6 digit number with at least 4 unique numbers. Rightio.
Chat support seems a bit clunky – but once we got chatting all good. Not as nice as Up but better than 86400 who don’t have it.
Transaction and spend tracking
Top up deposits via credit card require a CVC from your credit card every time. Arghhh, was my reaction. It’s unnecessary FRICTION that means I need to have my physical card with me to top up my account on my phone. Ouch! I preferred to use a bank transfer in the end but its not real time, but usually money hits the account overnight.
I could easily add my Up card to transfer funds in. Xinja’s transaction history is not quite as nice to read as Up’s.
Design
Compared to the others, it has a really simplistic minimal design. It’s low on extra features so you won’t get confused or lost while using it. Like Up, they also share their product roadmap publicly which is great and it’s exciting to see they have lots of great stuff coming.
Card
Xinja has the coolest opening experience from the card parcel / unboxing experience. Annoyingly it has the same number layout as Up, which makes it hard to scan in this card into apps like Uber, a classic case of design impacting functionality.
Notable pros:
- It was less than 15 mins setup with funds deposited to my Apple Card in my Apple wallet!
- No hoops to jump through to get the full 2.25%p.a interest rate on savings accounts.
Cons
- Same issue as Up, I can’t scan my card in the Uber app and others like it.
- Transferring money into my account is not real time, usually overnight but can take up to 3 days.
Revolut
Revolut is a UK neobank that was founded in 2015, which makes it the most experienced bank app. It beta launched in Australia in mid 2019. Revolut isn’t a stranger to controversy, having made some questionable ads and hiring practices in Europe, let’s hope they don’t repeat those mistakes in the Australian market.
Signup
I had to join a 1.5 hour waitlist. I was sent an SMS to notify me my account was ready to start.
Revolut has a $25 minimum deposit required to start an account.
You can add funds with Apple Card / Apple Pay by using a card in my wallet. It’s a unique approach but it worked, as I immediately had funds placed in my account. Great!
However, if you make a mistake or if something isn’t working they haven’t deployed Apple Pay Support in Australia yet, which is a big gap.
They have a unique identity verification process. I had to take photos of my id and a selfie.
Finally, it bugs me they haven’t designed the Australian website for Australian audiences. We use dollars, not pounds.
Transaction tracking
It allows you to set a monthly spend limit which is a savings feature winner. It also sends you instant payment notifications.
It doesn’t offer savings accounts but it does give you a ‘vault’ which you can round up money into, which is a nice feature if you have a seperate savings account somewhere else.
It also offers low cost international transactions to 15 countries (more if you sign up to premium Revolut).
App design
On first use of the app, it feels a little overwhelming compared to the other neobank apps. There’s a lot to get around and figure out. It’s nicely designed, but there’s a lot to work through.
Revolut has the ability to upload a profile pic, but I wonder why this is necessary. Maybe it’s a millennial thing?
The card
There are a range of options to choose from when you order the physical Revolut card, which means it’s not as simple and straightforward as the other apps.
They try to push you to upgrade your account to their $10.99 / month account during the process which is a little confusing. I avoided this and went with the standard card. The physical card arrived in the mail in under one week.
You get a digital card via the app, which displays the card numbers so you can use this card immediately with the Uber app etc. This is a feature not all the other neobank include.
Notable pros
- The savings limit is a clever idea, it would help me to manage my personal finances
- Integrated easily with my Uber and Hey You apps with a digital card number available on setup you can use from day 1.
- Great features for international travelers; with withdrawals fees from international ATMs covered up until $350 in fees.
Cons
- Some of the better features are only available on the paid for version.
- It’s not clear where my identity check data has gone.
- Apple Pay or Google Pay not available in Australia (yet).
My verdict
Up was my favourite of the bunch and the one that I think I’ll continue to use. I used this while travelling in Europe recently and avoided a lot of extra fees and could see what I was spending realtime in $AUD via their handy app notifications as soon as I made a purchase.
I really like what the neobanks are attempting to do in Australia. Is the market big enough to support all these new entrants? Can they expand their customer base beyond early adopters? Perhaps, if they continue to launch new features, offer competitive savings accounts and a better experience than the incumbent big 4.
My biggest hope is they don’t just become the product roadmaps for the big 4 banks to copy, I really hope they continue to innovate for us Aussies and stay ahead! We will revisit our review in a few months to see how they are all going and hopefully add a few more banks like Volt.
Simple comparison table
| Up | 86400 | Xinja | Revolut | |
| Apple Pay / Google Pay | ✔ | ✔ | ✔ | ✖ |
| Deposit Money in via PayID | ✔ | ✖ | ✖ | ✖ |
| Transfer money via PayID | ✔ | ✔ | ✖ | ✖ |
| Handy Push Notifications | ✔ | ✖ | ✖ | ✔ |
| Savings Account | ✔ 2.25% (bonus) | ✔ 2.25% (bonus) | ✔ 2.25% (bonus) | No |
| Advanced Budgeting Tools | ✖ | ✖ | ✖ | ✔ |
| Upcoming Bills& Payments | ✔ | ✔ | ✖ | TBC |
| Detailed Spend Analytics | ✔ | ✔ | ✖ | ✔ |
| Link Your Other Bank Accounts | No | Yes | No | No |
| International Transaction Fees | No | 1.5% | No | Only On Some Currencies. |
| Is there a waitlist to join? | No | No | No | Yes |
| Disable your card (not cancel) | Yes | No | Yes | Yes |
| Savings Roundups | Yes | No | No | Sort of (round up into a no interest paid ‘vault’) |
| Live Chat Support | Yes | No | Yes | Yes |
Savings Rates Comparisons Table – Up vs 86400 vs Xinja
Attractive & competitive rates offered, let’s break it down side by side
| Up | 86400 | Xinja | |
| Multiple Savings Accounts | Yes – you can name them | No – Only One Account | No – One “Stash” Account |
| Minimum Monthly Deposit | No | Yes $1000 per month | No |
| Maximum Rate Possible p.a | 2.25% | 2.25% | 2.25% |
| Base Rate p.a | 0.50% | 0.40% | 2.25% |
| Bonus Rate p.a | 1.75% | 1.85% | 0.00% |
| Bonus Rate Requirement | 5 debit card or digital wallet purchases from everyday account per month | None | |
| Bonus Rate Limit | Up to $50k in savings account. Base rate applies above $50k. | Up to $100k | Up to $245k |
| Will Withdrawal Affect Bonus Interest | No | No | Not applicable |
| Withdraw / Transfer Limit | $30,000 (but you can speak to them) | Unclear | |
| Dedicated BSB/Account for Savings accounts transfers | No | Yes | Yes |
Data as of 17th January 2020
