IN1Bank targets Chinese customers in Australia

George Lekakis
IN1Bank board member Helen Yap
Australia's newest digital banking startup, IN1Bank Ltd, is preparing to take on HSBC and the Bank of China in the fast-growing Chinese consumer banking market.

The Australian Prudential Regulation Authority issued IN1Bank a restricted banking licence last Friday following a 12 month examination process.

Mystery has surrounded the company's business model since Banking Day revealed details of the licence application in November.

But founder and managing director James Tong said yesterday that the strategic focus of the business would be to deliver consumer banking to Australia's under-serviced Chinese community.

"IN1Bank applied for its RADI licence in December 2018, and aims to be the first Australian bank to provide a full customer-centric bilingual digital banking service for the fast growing but under serviced Chinese-speaking retail market, as well as the digital banking market generally in Australia," he said.

"The key objective for IN1Bank is to be a trusted, secure and safe digital bank which provides a superior digital customer experience through the adoption of proven modern and agile technologies, and by offering innovative banking products and services."

The recent strong growth of HSBC and Bank of China in lending and deposits indicate the new bank might be entering one of the overlooked sweet-spots of Australian retail banking.

Since December 2017 HSBC has grown its retail deposits by more than A$3 billion or 35 per cent to $11.6 billion, while Bank of China has expanded its household deposits base by 45 per cent to $1.5 billion.

The new bank plans to refine its digital banking platform during its restricted license period but would not confirm suggestions made to Banking Day by industry sources that it had negotiated technology partnerships with Temenos and Microsoft.

Under APRA's restricted ADI licensing regime (RADI), the new bank now has two years to secure a full banking authority.

"IN1Bank has developed a clear technology and product roadmap for implementation during the RADI phase and a smooth transition to ADI," said Tong.

"The commercial priority is to address the key pain points/needs of the targeted customer base in a well-managed manner."

Tong said that the bank had embarked on a recruitment drive in Sydney where the company's head office is located.

A string of senior executive appointments have already been made, with several of Tong's former colleagues at BNP Paribas joining the management team.

The board is also replete with former BNP Paribas executives including Alnoor Premji and Franck Demoiseau.

A prominent member of the board is Helen Yap, the former head of DBS Bank's Australian institutional banking operation in Sydney.

Yap, who joined the bank's board last week, has deep experience working for Singaporean banks operating in Australia.

Before launching DBS's local branch four years ago she managed OCBC's local banking business.

The new restricted bank is sitting on about $9.5 million of Tier One capital after several issues of convertible notes to investors earlier this year.

Under the terms of the note programs around $9 million worth of debt automatically converted to equity in the company when the restricted license was granted by APRA last week.

Tong said the bank planned to raise additional capital in the next few months with a funding program aimed at wholesale investors in Australia and abroad.