• The Australia Post’s In Australian Online Shopping report released in June 2021 illustrated a percentage growth in online shopping that exceeded 45% in comparison to 2019

  • There has been an over 30% increase in online household shopping over the same time period.

  • Despite the explosive expansion of the digital sector, over 2,500,000 Australians remain entirely offline.

Digital banks (also referred to as Neobanks) started to appear in the Australian market back in 2018, following a series of serious legislatives changes to the financial sector.

These digital banks are entirely online- with no tangible human bracket that enables customers request advice or initiate enquiries in person.

This does not mean that they are not available to their clients, however, with most Neo banks currently offering 24/7 customer service.

Despite Neobanks ’ relatively late appearance in the Australian market, the sector has recently begun to bloom from a financial standpoint, starting to serve as a potential value-alternative to the traditional Big Four australian banks by incorporating AI tools into their models and enhancing user utility.

These are: the Commonwealth Bank (CommBank) , the Australia and New Zealand Banking Group (ANZ), Westpac (WBC), and the National Australia Bank (NAB)- which have traditionally jointly held around 80% of the market share.

The COVID-19 pandemic inadvertently further drove the incorporation of the digital market amongst the big banks; A report released by Deloitte, for example, found that over 50% of active banks moved to either close down or shorten the active hours of its branches- adding new digital banking features and segueing towards the digital banking sector.

Such features include: remote verification, solely remote account creation, and contactless payments.

Despite these banks cumulatively managing over A$1.4 trillion word of assets- and more than 145% of the nation’s GDP, digital banks have managed to engage and compete with the sector in a very innovative way. Their structure has allowed them to differ significantly in comparison to their more ‘traditional’ counterparts, significantly proliferating their popularity.

A Slow Bloom: Australian Market

Even though Neobanks have successfully operated within Europe for a plethora of years- primarily in Germany and the UK, certain legislative restrictions meant that it was nearly impossible to launch a digital bank in Australia until very recently.

Since receiving royal ascension, a variety of digital bank initiatives have begun in the Australian market- including Volt, Hay, Judo, and Revolut, all of which were founded by either former Big Four Bankers or former tech entrepreneurs.

New Zealand, on the other hand, has yet to ‘open’ its doors on the digital financial sector. This, however, is likely to soon change in light of the Reserve Bank of New Zealand- coupled with the Financial Markets Authority, allegedly working jointly to remove all of the relevant national barriers to entry to the industry and consequently expand the sphere’s competitiveness.

Latest Features: TRUiC’s Research

TRUiC- short for The Really Useful Information Company, has recently released a study which analyses Australia’s and the U.S.’s current best business bank accounts, detailing the exclusive features they offer, as well as their pros and cons.

This is crucial, as determining the most ideal business checking account for your startup will play a fundamental role in the way in which you can pay your business insurance, collect capital, accept credit card payments, and open up different merchant accounts- to name a few.

One of TRUiC’s most notable choices is BlueVine. This bank allows business owners to make a limitless amount of financial transactions without any fees, and- even better, charges zero fees for opening or maintaining a business account.

This can be particularly helpful for starting businesses that don’t want to worry about their sales revenue and sunk costs straight from the get-go.

Final Take: An Optimistic Future?

The growing shift towards online banking and remote accessibility is undeniably here to stay, with over 3 quarters of Australian customers conducting their banking on a computer, laptop or smartphone in 2021. Australians are not big on offshore banking at all.

This is likely indicative of a much wider global trend, stemming not only from consumers’ increased technological access but also from the unprecedented COVID-19 pandemic- which has seen consumers around the world shift their preferences to online shopping models.

During the exhausting lockdowns, consumers around the world experienced the true potential of online businesses, and with today’s ample safety precautions and protective regulations, there is really no reason that this trend shouldn’t continue to extend to the banking sector.

Within Australia, digital banks are required to attain an Australian Deposit-Taking Institution Licence. This is issued directly by the Australian Prudential Regulation Authority (APRA) and pragmatically means that digital banks are- at least in legal terms, almost identical to the more traditional banks as far as customer protection schemes are concerned.