Struggling fintech Xinja Bank has been forced to delay the launch of its US share trading service because it has not yet secured approval from the prudential regulator, APRA.
Xinja said in July that it expected to begin offering access to US share trading by the end of August, but there is still no sign of the service on the bank’s mobile app.
Chief executive Eric Wilson said on 21 July that the bank’s customers would be able to trade US shares and exchange-traded funds for a flat monthly fee of A$8.
The service would also allow Xinja account holders to invest fractionally in high value US stocks such as Apple and Tesla.
On its digital community forum last week the bank responded to enquiries from customers seeking an explanation for the delayed launch.
Xinja’s community manager Camilla Cooke confirmed that the stalled rollout of Dabble was due to APRA not having signed off on the business expansion - rather than the Australian Securities and Investments Commission - the regulator with direct oversight of share trading platforms.
“Hi guys - Dabble is sitting ready waiting to go and has been for quite a while,” Cooke told customers on 14 September.
“I’ve been trading on the pilot for many weeks. It’s regulatory stuff that is causing the pause.
“APRA are being very thorough, which is their job after all.
“We were hoping to launch today (14 September) in fact but as of Friday that’s not possible. Could be this week but not for sure,” Cooke said.
With Xinja operating its service as an authorised representative of ASIC licensee Sanlam Private Wealth, the reasons for the delay on APRA’s approval are not clear.
One possible explanation might be that the prudential regulator needs to be convinced that Xinja is able to effectively monitor the performance of its outsourcing partners, particularly those operating overseas.
Xinja has enlisted US share trading technology provider Drivewealth to deliver the core execution and management functions for the Dabble platform.
Drivewealth’s platform underpins many US share trading services around the world including those marketed by Revolut in the UK and Stake in Australia.
Also, the regulator might be concerned there could be reputational risks for a newly licensed bank wanting to market a stock trading service to thousands of its retail depositors during an extremely volatile period for equity markets.
Xinja is trying to unlock revenue-generating businesses such as Dabble to counter the cash-burn from its capital expenditure program and the launch of its high-yielding Stash deposit account in February.
The bank at the end of July had attracted $462 million from thousands of depositors via the Stash account.
It is currently paying a sharp rate of 1.65 per cent on those deposits even though it does not have any lending products in the market.
Delays to the rollout of loan offerings appear to be testing the patience of some investors in the bank, who last month were offering up their shares for sale, according to posts on the Xinja community forum.