The International Bank of Australia will enable “seamless end-to-end movement of money”.
Novatti Group (ASX: NOV) emerged from a trading halt this morning with news it was launching the International Bank of Australia, which will focus on assisting fintechs requiring an “innovative and nimble banking partner”.
The launch of International Bank of Australia comes after the Australian Prudential Regulation Authority officially granted it a Restricted Authorised Deposit-taking Institution licence.
Novatti managing director Peter Cook said securing the banking licence was a “significant milestone” for the company’s long-term strategy and is the culmination of “several years of investment and development”.
“We see banking services as significant across card issuing, merchant acquiring, billing and cross-border payments as it underpins the infrastructure and capability to Novatti’s core payments business, while also giving us the ability to increase margins,” Mr Cook explained.
“[The International Bank of Australia] has the strong advantage of being able to leverage Novatti’s existing payments ecosystem and global footprint to help win customers quickly.”
Disruptive business models
According to International Bank of Australia chief executive officer Guy Carvalho, traditional banks have been unable to keep up with the disruptive business models of fintechs – particularly those that offer alternative ways to make or accept payments.
“[The International Bank of Australia] will overcome this challenge – leveraging technology to enable seamless end-to-end movement of money.”
Mr Carvalho added the bank will focus on assisting fintechs that need a “nimble and innovative banking partner”.
The fintech banking and payment pool is estimated to be valued at $500 billion.
Migrant market
Another market for the newly launched bank will be the migrant sector, which Mr Carvalho says is “significantly underserved”.
As part of this, the bank will leverage Novatti’s payments ecosystem and global operating base to target customers overseas. This will enable them to set-up bank accounts and make transactions before they even set foot in Australia.
An international student will now be able to establish an account online with the International Bank of Australia and begin transferring funds from their home country into the new account for use in Australia, including paying university fees and rent.
This will bypass large international transaction fees.
“This is an incredibly unique service which will provide significant value to potential customers who want to get their lives sorted before reaching Australia,” Mr Carvalho said.
Novatti estimates banking services for the migrant sector including students, professionals and tourists are worth about $120 billion.
Novatti ownership
As part of securing the banking licence, Novatti undertook a series A equity round, which will see it make an additional $5 million investment in the bank.
All-up, $8 million in new funding was generated in the series A equity round – giving the bank required resources to launch and build its business.
At completion of the round, Novatti will have a 91% holding in the bank.
Read the article: https://smallcaps.com.au/novatti-group-launches-international-bank-of-australia-key-regulatory-licence/
What's a
Restricted ADI?
International Bank of Australia is authorised by the Australian Prudential Regulation Authority (APRA) to operate under a Restricted Authorised Deposit-taking Institution licence until 2nd November 2024. Under this authority International Bank of Australia has restrictions on the amount of deposits it can take. Under this restricted licence International Bank of Australia is not required to meet the full ADI prudential framework and will not be offering banking products to the general public.
International Bank of Australia has put in place arrangements to protect customers in the event it is required by APRA to discontinue banking business and exits the banking industry. This includes:
- International Bank of Australia being required by APRA to contact customers to advise how they are impacted, e.g. deposits may be returned or transferred to another bank;
- the Banking Act 1959 provisions for the protection of depositors apply to International Bank of Australia; and
- International Bank of Australia is covered by the Australian Government Financial Claims Scheme (FCS). The FCS applies only to protected accounts. It is important customers check the terms and conditions of their specific product to determine if it is protected under the FCS.
Licensing guidelines for authorised deposit-taking institutions | APRA
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