Neobanks in Australia

The term “neobank” seems to be cropping up more and more in the Australian market. What should investors know about neobanks in Australia?

The term “neobank” seems to be cropping up more and more in the Australian market. But what exactly are neobanks, and can investors capitalise on this new way of banking?

Neobanks, sometimes known as smart banks or digital banks, are banking institutions that operate exclusively online. They don’t have branches, and instead conduct business online and via apps.

They’re also not backed by one of the big four banks — Australia and New Zealand Banking Group (ASX:ANZ), the Commonwealth Bank of Australia (ASX:CBA,OTC Pink:CBAUF), National Australia Bank (ASX:NAB,OTC Pink:NAUBF) and Westpac Banking (ASX:WBC,OTC Pink:WEBNF).


For that reason, the technology neobanks use is typically developed from scratch rather than relying on existing or legacy systems employed by traditional banks.

The first neobank to debut on the Australian Securities Exchange (ASX) was Douugh (ASX:DOU) in October 2020; after an app launch in the US, the company will be rolling out in Australia in 2021. The firm describes itself as a next-gen neobank and has plans to get into the buy now, pay later game by teaming up with payments company Humm Group (ASX:HUM).

Private neobanks in Australia include Volt, Up, 86 400 and Judo Bank. Volt had been planning an initial public offering for last year, but its launch was scuppered by the global pandemic.

How do neobanks differ from regular banks?

The biggest difference between the two banking options is that neobanks have no physical branches. As mentioned, their services are completely digital and almost entirely app-based.

In fact, getting started with a neobank takes mere minutes after downloading an app. Most neobanks are compatible with digital wallets such as Apple Pay, Google Pay and Samsung Pay. However, new users can also get a physical card posted to their address if they want.

Aside from that, neobanks generally share a philosophy of wanting to change the way their customers manage their money and do their banking. Since they don’t need to maintain a branch, neobanks are known for having low costs thanks to minimal fees. They use artificial intelligence to help users track their spending and give personal insights on each user’s overall financial position.

One drawback of neobanks is that unlike traditional banks, which have been established for years and offer services like car insurance and home loans, neobanks may have limited offerings initially as they launch with basic transaction accounts. Some neobanks do not have a joint account offering.

Neobanks should not be confused with online-only banks. Online-only banks are often a division of a bigger bank or credit union, meaning they use a digital version of an existing legacy banking system.

Examples of these would be UBank, which is owned by National Australia Bank; ING Bank (Australia), which is owned by ING Group (NYSE:ING); and ME Bank, which is owned by industry super funds. A neobank is different from these since it uses its own system that has been built from scratch.

Are neobanks financially safe to use?

Neobanks have some appeal over regular banks, but investors and potential users may wonder if they are safe. Despite their novelty, there are measures in place that provide protection.

Like other banks, neobanks must convince the Australian Prudential Regulation Authority (APRA) that they are safe and worthy of getting a licence to become an Authorised Deposit-Taking Institution (ADI).

Once a neobank has its ADI licence, it is covered under the Financial Claims Scheme, which means users’ savings are guaranteed up to AU$250,000 by the Australian government. This is the same guarantee offered by a big four bank (or any other brick-and-mortar bank). Making sure a neobank holds an ADI licence is a good indicator for its consumer safety factor.

APRA brought in new rules in 2018 that simplified the ADI process and made it simpler for neobanks to launch. The first neobank to be granted a licence was Australian startup Volt in January 2019.

What’s the future of neobanks in Australia?

Australia’s four major banks may be feeling the pressure to increase their digital offerings as neobanks rise in popularity, but right now their hold on the banking space remains fairly solid — new research shows that 67 percent of Australians have never heard of neobanks.

Aside from that, the neobank space suffered a setback in December 2020 when Xinja, the most famous neobank, folded less than a year after launching in Australia.

COVID-19 reportedly played a role in its downfall. After record-breaking equity crowdfunding rounds, in 2020 things took a turn for the worse for the startup, which began hemorrhaging capital by paying out more than AU$7 million in interest payments a year. Without a lending product (and thereby a revenue stream) the collapse was inevitable for Xinja.

That said, the global pandemic has had positive implications for neobanks in Australia as well — 82 percent of Australians under 55 are now open to the idea of a digital-only bank for at least one product offering, although not yet for their main banking service.

For investors who want to gain a toehold in the market, publicly traded options are still sparse. But if neobanks can avoid pitfalls and attract broader interest there may be more chances to get involved.

Don’t forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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Gold isn't all that glitters in the land down under — silver in Australia is a major industry, and the country is home to both large and small players.

When it comes to precious metals, Australia has long punched above its weight — the nation was born riding the wave of a gold rush.

Gold isn't all that glitters through — Australia is also a major global producer of silver. It's among the 10 top producers, and was ranked seventh in 2020, with 1,300 tonnes coming from the many operational mines in the country. By comparison, the world's top producer, Mexico, produced 6,300 tonnes that same year.

Other key players in the silver market are Peru, China and Russia, which produce more silver than Australia, and the US, Argentina and Bolivia, which produce less.


Australia is sitting on quite a lot of the precious metal, with the world's second largest reserves, behind only Peru.

According to Geoscience Australia, one of the country's first mines was a silver-lead mine near Adelaide. Since then, the entire continent has been combed over with a fine-toothed comb, with deposits identified in every state and territory and active mines in every jurisdiction but one (Victoria).

Overall, Australia is well explored when it comes to silver, and since the mid-1800s it's had a constant stream of silver production. Aside from that, the country boasts metals-processing facilities in South Australia that separate the precious metal from its commonly mined counterpart metals, lead and zinc.

Silver companies in Australia

Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.

Most silver comes from mines dedicated to other metals — Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc, but between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 — over 200 tonnes.

Elsewhere, BHP (ASX:BHP,NYSE:BHP,LSE:BLT) produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020 (or almost 28 tonnes).

According to Geoscience Australia data from 2016, over 20 mines in Australia produced silver in that year, while there are dozens of other resources identified in each state.

A primary producer of silver is the Cannington mine in Queensland, where South32 (ASX:S32,OTC Pink:SHTLF), a company that was spun off from BHP in 2015, mines silver and lead. Cannington is a big one, producing 11,792,000 ounces in 2020, or 334 tonnes of silver.

Tasmania boasts the Rosebery mine, which has seen 85 years of continuous operations and is currently owned by MMG (ASX:MMG,HKEX:1208). Rosebery, like all the others here, is polymetallic, and besides silver also produces copper, zinc, lead and gold. MMG also has the Dugald River mine in Queensland which also produced silver.

Getting into smaller companies, there are those like New Century Resources (ASX:NCZ) which restarted the Century mine in the Northern Territory for zinc and silver.

The future of silver in Australia

So, you get the picture — there's a lot of silver to be mined in Australia by way of mining everything else.

It's worth noting that because silver operates both as a precious and an industrial metal, and is mined most often alongside base metals, it can be pulled in many directions. However, it traditionally follows (and lags behind) its precious metal sibling, gold, making it a valuable investment commodity to keep an eye on.

Looking forward, the future of the commodity in the land down under — especially given Australia's significant reserves and operator diversity — is as bright as you'd like it, and depends on what investors are most interested in, given the by-product nature of the metal.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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