In a bombshell decision that's dismayed the Australian fintech sector, APRA yesterday declared that it will "temporarily suspend the issuance of new APRA licences."
There appear to be no exceptions, other than one rider added by APRA .
This is in the "rare case that the granting of a licence is necessary for APRA to carry out its mandate."
This leaves Hay in the paddock and strands GO, Novatti and a myriad of others - there is no reliable count in the public domain - that joined the hunt for either a restricted or full blown banking authority.
While APRA's letter ropes in any firms seeking entry into superannuation or insurance, the announcement is aimed squarely at wannabe neobanks and optimising depositor safety in the framework of a newly energised (if deeply troubled) oligopoly.
"Financial institutions, particularly those that take customer deposits … occupy a unique position of trust. The financial safety of these institutions is key to the financial stability and well-being of the community," APRA said in the preamble to its policy reversal.
The prudential regulator's edict may prove terminal for a chunk of the still nascent neobank end of the fintech sector in Australia, depending on how many fold their tent.
In a furious statement Rebecca Schot-Guppy, general manager of Fintech Australia, the industry association, confirmed not all in the queue will have the patience or the means to wait.
"A minimum six-month delay to licensing could collapse fintechs seeking this licence and cost us jobs, they can't afford to tread water for that long," Schot-Guppy said.
There will be a resilient remainder of fintechs that stay the course with APRA over licencing - burning founder capital, with management forever rewriting their pitch deck in pursuit of waning pools of fintech funding.
More tellingly, there is now scarcity value in those neobank licences that have been granted.
One of these - in1bank - has held a licence since late last year and only recently migrated to building a waitlist.
A handful are up and running, only a couple making waves.
M&A among the littlies or outright offers for those already trading might be the only course of entry into the banking industry for any fintech with the drive, a business plan that persuades APRA and assured funding.
Of the wannabes now grumbling at APRA, one publicity seeker - Hay - won't be able to blame its inability to make the banking grade on the regulator.
In the last week of February the Financial Review reported Hay was on the cusp of securing the green light for its banking entry, subject to actually rustling up the minimum capital negotiated with APRA.
Hay then ensured a raft of popular consumer finance websites had the story that one more neobank would soon emerge, that its waitlist was open and, in any event, Hay would be able to begin trading any day with a preliminary product set under its Australian Financial Services Licence.
Andrew Laycock, Hay's cornerstone shareholder and CEO, reiterated all this in a confident catch up with Banking Day at the end of the month.
None of this happened, and readers can only surmise Hay was unable to arrange the capital needed to finalise the process with APRA. Banking Day has heard Hay's target valuation was well north of the A$100 million valuation implied in the 86 400 top up capital raising completed this week.
APRA in its industry letter explained that "experience has shown that it is challenging for new entrants to succeed even under normal economic conditions, which is why APRA does not consider it prudent to license APRA regulated entities at this time.
"As the operating environment stabilises, APRA will keep its approach under review and advise current applicants when the granting of licences will restart. However, APRA expects this temporary hold could last at least six months and delay APRA licences by at least this timeframe.
"During this time, APRA will continue to assess current licence applications so the delay on launching when the hold is lifted is minimised."
Six months equals at least a year, maybe much longer, COVID-19 more than likely defining the end of the wayward neobank era in Australia.