Payments fintech Novatti Group will press ahead with its application for a banking licence, despite APRA’s announcement last month that it will impose stricter requirements on applicants for ADI licences.
Delays in the processing of banking licences have already cost Novatti the support of a working capital provider.
Novatti submitted an application for a restricted ADI licence in November 2019.
In April last year, APRA put all ADI applications on hold. With the publications of the new, stricter guidelines last month, APRA is expected to resume processing applications.
Novatti managing director Peter Cook said in a statement: “Developing Novatti’s new banking business is a key pillar of our long-term growth strategy.”
However, the delay in the licensing process has come at a cost to Novatti. The company announced that it has bought back a A$1.1 million convertible note from Australian Fintech Investment Group.
The convertible note was issued as part of a strategic partnership with AFIG, designed to provide working capital for product development. The note was issued by Novatti’s dedicated banking subsidiary, Novatti B Holding Co.
Novatti said: “In the light of APRA approval delays caused by COVID-19, the Novatti Group has agreed to buy back the converting note from AFIG.”
APRA said its new licensing requirements may be considered a “slight raising” of barriers to entry.
The regulator is consulting on its revised approach, which is likely to include a requirement that new entrants have more advanced planning for a potential exit, including “a credible return of deposits option”.
Another proposal is that restricted ADIs must achieve a limited launch of both an income generating asset product and a deposit product before being granted a full ADI licence.
Applicants for a full ADI licence should have these products in the market shortly after authorisation.
APRA is also planning to provide “increased clarity” around capital requirements at different stages for new entrants, aimed at reducing volatility in capital levels.