Robert, how did you get to build Australia’s first smartbank?
I am a banker by background, I spent 15 years with one of Australia’s Big 4 banks and was given the opportunity to run banks in the Pacific and Japan. I came back to Australia to run a mid- sized mutual bank, and immediately before starting 86 400, worked for Cuscal (100% shareholder of 86 400).
Cuscal has an impressive track record of enabling competition through innovation and technology. They are an early adopter and one of the key founders of the new payments platform. While the big four banks are going very slow rolling out NPP, Cuscal quietly launched more than 40 financial institutions on day one, and did the same with Apple Pay.
Cuscal could see the trends overseas in terms of digital banks and spent a couple years researching international markets. We looked at bringing some of those models to Australia and decided to build a digital bank ourselves. I was involved in the original business case and then moved into the CEO role once Cuscal decided to move ahead with 86 400.
What has the journey been like so far?
But there is no other job I’d want, anywhere else in the world than the one I have right now. Building a full bank from scratch is incredibly challenging and exciting. We've gone through the process of getting a full banking license and now we are live. It has been an incredible journey so far and an amazing two years.
Working with our Chairman, Anthony Thomson is an unbeatable learning experience and I am supported by an amazing group of people. We’ve gone from 8 people on day one to now just over 90 people.
You spent two years building the bank. Now that you are live does it feel like a different business?
The reality is that the build will never be finished. The big difference between 86 400 and incumbent bank is the build. We have daily live releases and new updates to the App every four or five days at the moment. So the product is never going to be finished, we are constantly building.
But it is very exciting to be live with the product and finally putting it into customers hands. We think 86 400 is a really strong day one offering to customers, but we intend to improve. We have made it our mission to help Australian’s take control of their finances.
Australian’s seem spoilt for choice with new NeoBanks. What distinguishes 86 400 from other NeoBanks?
I think that's perhaps the wrong question to ask. The big four banks currently own 85% of the market so we are entirely focused on providing a product that offers a better experience, service and value than the big four banks.
That is the market we want to go after. We see the Big Four as the competition not NeoBanks.
8 million Australian’s currently bank using their smartphone. Of that 8 million 86 400 is focused on the 25 to 45 year age group (4.6 million) but our youngest customer is 16 and our oldest is 88!
We are giving customers something entirely different, smart banking.
What is a smartbank?
Before launching 86 400 an enormous amount of research was conducted over two years to unearth and understand the real problem in banking. People naturally point to the Royal Commission and highlight trust as the problem. Trust is massively important but the real problem we see is this;
Money and our finances are becoming very difficult to manage.
More than 65% of Australians have a relationship with multiple banks. Today we have more money coming in and out of our bank accounts than ever before, which we never see, subscriptions, direct debits and we tap our card or phone more than ever.
It is like money has become invisible. People feel like they are not in control of their spending, making them increasingly anxious about money.
Our core company value is to help Australian’s take control of their money. So the 86 400 team have designed and built a smartbank that helps Australians take control of their money.
A smartbank is a very different premise and value proposition to the large incumbent banks. 100% cloud based technology, purpose built for people who use their smartphone for everything, banking, payments, applying for a loan etc.
One of 86 400’s unique features is the ability to link up to 150 other different banks to the App and view your credit card, transaction accounts, savings accounts, personal loans etc. You can see all your finances in one place. It gives customers immediate value when they join 86 400.
That’s what we think will help us compete against the big four banks.
We are extremely happy with the early feedback. There are two measures we are focused on right now and the initial response is very encouraging;
Are customers happy with the product?
And are customers happy to tell other people about the product?
Will Open Banking give 86 400 a competitive edge?
We believe that customers should own their data and if a company does hold data it should be used to the customers advantage, not just to sell more products.
Banking has always been focused on the past. A bank statement records what you have already spent, it is too late to do anything about it once you get the statement. Even with today’s banking apps customers see their statement now, but they are still looking backwards.
Once a customer links all of their bank accounts with 86 400, smart algorithms predict what bills are coming up in each separate account. That's a massive difference to what we see anyone else is offering in the market and the feature is resonating extremely well with our early customers.
It takes 120 seconds to open an account. You sign up and get immediate value. This is just a small example of what customers can expect from us when open banking really gets going.
86 400 is one of only two banks to be chosen for the Open Banking pilot program. We are very excited and consider it a huge privilege to play such an important role influencing the future of Australia’s banking industry for the betterment of customers.
But we are not naive, there is a long road ahead and there will be challenges along the way. Not everyone has bought into the benefits of open banking and we are already seeing some resistance as Cuscal witnessed when rolling out NPP.
How is the team structured?
In total there over 90 staff. Roughly 50% of the team are tech people. Developers, Engineers, Designers, UX and Data Scientists. As a fully licensed bank we have risk, finance and credit functions. The homeloans business is about to go live to the public so we have a full team in that business unit.
The entire team is a mix of highly experienced bankers and highly experienced tech people. We only employ people who are digital natives and passionate about technology. We don’t expect a 30 year banking veteran to become a developer, but you have to be comfortable using technology and be passionate about what technology can do to revolutionise the banking industry.
What qualities do you look for in people?
Our core company value is to help Australian’s take control of their money. And that principle determines not only the product we are building but the culture we are creating too. Thousands of people reach out to me and the team asking about career opportunities with 86 400.
The first thing we look for are people who can actually do the work themselves. There isn’t the luxury of hiring people whose unique skill is to run a team or focus solely on strategy. We need leaders who can be strategic and actually do the work required to deliver. I appreciate we are looking for a very unique person and skillset.
86 400 operates an Agile environment with a fortnightly showcase where our people stand up and share what they have delivered in the last two weeks. That can be frightening to some people coming straight from a big bank environment. But it's highly exhilarating for the people we seek to employ, because they get to build stuff without the blockers you get in large organisations.
How have you hired and retained the right talent?
We have a dedicated HR team which is a big help. It’s a very exciting time to be in the industry. Our people are genuinely passionate about changing banking for the good of customers. 86 400 is small, we have a very flat structure so there is much greater ability to influence outcomes for those who are prepared to roll up their sleeves and Get Things Done.
We are a technology business first. But right now we don’t have the room for bean bags and a table tennis table. We don’t see the need for an innovation hub because if the innovation isn't happening around the boardroom, then 86 400 has a BIG problem.
It is reassuring for me as CEO to see the team stay here because they feel the work they are doing is important and has meaning. And not stay here because we have beer pumps and table tennis. The whole team shows enormous pride in the work they are doing.
Success is celebrated as a team. When the first home loan was finalised, when we got our license, when we went live with the core banking system, when the first card transaction with an ATM happened. All of these milestones have been celebrated as a team.
There will be lots more to celebrate over the next few months. The homeloans product goes live to the public soon. The biggest celebration for me is the feedback we get from customers every day. It’s so rewarding to know that 86 400 is truly delivering on our core principle of helping Australian’s take control of their money.
Founder of Tier One People and host of the Fintech Chatter Podcast.
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