The nation’s first smartbank is helping Australians take control of their money every day, every hour, and every second.

86 400, the venture magazineThere are 86,400 seconds in every day, and Australia’s first smartbank is here to make those seconds count in new and thrilling ways for its customers. “The Australian environment is absolutely ripe for new technology in banking,” declared 86 400 CEO Rob Bell. “Australia’s ready for a new bank.”

That new digital bank is the very first of its kind in the nation, designed with mobile-first technology. Unencumbered by the legacy systems found in traditional banking, 86 400 chose the best technology and the best minds to develop their pioneering neobank. “We were granted our full banking licence on 18 July 2019, allowing us to operate as an authorised deposit-taking institution,” Bell revealed.

All deposits to 86 400 are guaranteed up to $250,000 per customer by the Australian Government’s Financial Claims Scheme. “We are laser-focused on the segments and market that we’re going after, so we’re not distracted by the millions of opportunities of banking in Australia.” 86 400 focusses on three product pillars, all of which are transaction accounts: savings accounts, checking accounts, and home loans.

“Australia is second behind Singapore with smartphone usage and has higher mobile banking penetration than most developed countries globally, so we had a really strong starting base,” added Travis Tyler, the bank’s Chief Product and Marketing Officer. “What we also saw in the Australian market was the rise of mobile wallets and digital payments. All segments were starting to adopt mobile phones. Over half of Australians are dominantly doing their banking by mobile, so it’s not hard to believe that in five years everyone will be doing that.

“Of 18 million banking customers, 9 million are predominantly banking by smartphone, making it a large enough addressable market for us. It’s proved to be very, very successful with our first customers, and that enables us to have that laser focus that Rob mentioned. Our customers are completely happy with that. We can deliver the best possible experience and service at the lowest possible cost, which also means that we can give much better interest rates on savings and home loans.”

Passing on Savings

86 400, the venture magazineThe national average APY for a savings account is a skimpy 0.9%. 86 400 is structured to give customers consistently stronger rates, currently offering 2.25% APY. “We’re proud of having great rates, but everything we designed the bank for is around helping Australians take control of their money,” Bell stressed. “When we looked at the research, we realised that if it was going to be the same as the other banks, Australia didn’t need another bank.”

Banking apps offered by legacy institutions are common, but they’ve emerged from arcane systems that are limited in flexibility and scope and are thus limited and pretty inflexible. Mobile-first design is creating a new era of agility and customer access to information.

“Bank customers are making more transactions every day, and it’s difficult to keep track of them,” Bell said. “Sixty per cent of Australians have two or more banking relationships, and there’s more money coming out of people’s accounts automatically from direct debits than ever before. Think of the money you can’t even see coming out of your account for subscriptions, for example.

“These things left Australians feeling anxious and not in control of their money. Everything we’ve built is anchored to the question, ‘How do we help Australians take control of their money?’ We use that thinking in our design of our products. We’ve had great savings rates, but we only have one criterion: You have to put $1,000 into that account. We go a step further. If you only have $999 in the account, we’re not going to say, ‘We’re going to trick you and charge you interest.’ We’ll send you a notice that your account is only at $999 and remind you to put another dollar in so you can get your rate. We’ve built these things into our products to help Australians get control of their money.”

Getting Smart

86 400, the venture magazineAmong the features getting deep customer love are the Pay and Save account, a full-featured no-fee transaction account that accepts Apple Pay, Samsung Pay, Garmin Pay, Google Pay, Visa Debit, and other payment methods. “We’re not aware of a new digital bank that’s been launched with such an extensive transaction account from Day One,” Bell said.

The ability to view other banking activity alongside the activity in their 86 400 accounts is a big leap forward in customer convenience. “One of the hardest things to get people to do is to move banks. We tell customers not to move banks, but to open an account and try us, and, by the way, you’ll get viewing access to all your other bank accounts. You can see whoever you bank with and get an aggregate of the total balances of all the accounts and all of the transactions that are going on in those accounts,” he added.

“We’ve gone further than that, as you might expect for a smartbank. We’ve applied some technology smarts and algorithms and you can see your transaction history across your 86 400 account and your external banks and we can predict your upcoming bills. This is one of the things people love about 86 400. Banking has always been about history, about ledgers, about telling you what you spent. We turned it on its head and use that history to help people look forward. We’re predicting people’s major bills.”

Giving customers inside information they can’t easily get from legacy institutions has been a very pleasant eye-opener. “It’s really surprised people. It’s even surprised our smartest and brightest developers on the team when they saw how many things they were buying on subscription that they weren’t using,” Bell recalled. “We’re giving you a look at what’s possible with data going forward. In building a smartbank by using the right technology, these are the kinds of things we can add that incumbents just can’t do because of their legacy systems. We are very proud of it and we’re just getting started.”

Energy Switch

Ready for takeoff as we go to press is the neobank’s unique Energy Switch service. As Tyler put it, “Our purpose is our North Star — and that is helping Australians gain control of their money. There are two ways to get ahead: Earn more or spend less. We looked at the people’s largest monthly spends to find ways to help them control that spending.”

Identifying energy as a high-cost spend was the first step. “With the capacity and data we have, we looked for very smart ways to save money. With Energy Switch, all customers need to do is send us their electricity bill. We then take 200 data points from that and compare them against hundreds of plans. We then provide them with the top three plans, then we can select the best plan and initiate the switch with the underlying energy provider,” he added. On average, customers can pocket $400 a year with Energy Switch.

With current savings rate at 1.5%, to get that kind of cash in hand without the program would mean keeping $25,000 in an account for a year.

“Every second of every minute of every day we’re working with your money so you won’t have to,” Tyler said. “As we’ve gone ahead and built up the bank, we’ve looked at the core capabilities that we’re going to be best at, and that’s our customer experience engine. We looked at all of the logic and capabilities that deliver the experience to the customer, the Big Data platform in the cloud, and said, ‘That’s what we’re going to invest in.’ Then we looked at other experiences such as Energy Switch or our core banking system, working with providers who can provide them faster and at a lower cost, so then we can focus on the elements of banking that deliver a great customer experience.”

Hitting Home

86 400, the venture magazine86 400 offers a smartphone home loan experience designed to make one of our most desired and nerve-wracking opportunities—the chance to own a home—easier, faster, and more accurate for everyone involved.

Tyler explained, “Over 60% of home loans are written through mortgage brokers. It’s the biggest challenge and the fastest growing channel, so we work with national mortgage brokers to distribute our home loan experience. Firstly, what we’ve really focussed on is solving the pain points of getting a home loan. It’s a very complex and scary process.

“We don’t ask you for any paper. We don’t ask for your pay slips, your government benefits, your bank statements, or your expenses.” Instead, they use their proprietary Smart Statements tool to gather 12 months of bank account data to populate an application form. “We’re able to give them a near real-time decision in terms of how much they can borrow and get approved. We took a process that typically takes between six and 20 days into a matter of minutes. With our initial customers, we are giving them final approval within one day,” he said.

The company works with over 100 banks to get the necessary decision data. “We take that information from any bank. We have built algorithms that take a better view of spending and income over a 12-month period to have a much better look at what can be comfortably borrowed,” Bell said.

“What customers really love about our process is that it’s the first time they’ve seen their whole financial world in one place. They get an idea of how much they spend on groceries or fashion. It was even a surprise to me in categories where I spent and didn’t spend. That’s part of our proposition of helping people gain control: getting all your money in one place … we’ve built a really flexible product that allows people to structure money in their way but it helps them get ahead.”

Banking on Themselves

86 400 built their customer experience engine themselves, not relying on a third party off-the-shelf product. “That’s a key difference for us,” Bell noted. “We’re quieter than some of the others, we like to deliver products and surprise people with our products and features. We don’t tend to talk about them in advance, which is a little bit different to some of the other banks around the world, but that’s our style. We’d rather get things done and surprise people with what we’ve been able to create.”

With a close-knit team of 90 staff—half of whom work developing technology and designing customer experience, whilst the other half attends to critical regulatory compliance and risk management work—the leadership is especially invested in hiring the right minds for their startup culture. “Having that balance of new and experience is what it takes to run a bank,” Bell said.

“It’s absolutely critical in a small startup bank to get the right people that can make a real difference. We do an incredible amount of work ensuring that our teams are fully formed and contributing. We’re clearly a startup bank where you roll up your sleeves and do a lot of work yourself,” he continued. “If you’re looking for someone else to do the job, best go into the bathroom and look in the mirror because it’s probably going to be you.”

In making banking smarter, more accessible, profitable, and pleasurable, 86 400 is changing what we think about banks, and what we need most from them: the ability to control our own fiduciary fortunes.

“We believe Australia is ready for smarter banking,” Bell concluded. “Banking is going to change, and we believe we’ll be at the forefront of that. We’ve started it.”