As Aussies continue to shift towards a cashless economy, Commonwealth Bank has confirmed it will be closing 10% of their branch network at lunchtime for reduced operating hours in response to declining foot traffic as we move all our banking and finance needs online.
Where branches traditionally facilitated cash transactions, the declining use of cash has simply made them irrelevant to the point where the Big Four have combined to permanently close 345 branches in the past 18 months.
According to data released by the RBA this month, total card purchases increased 23.9% over the past 12 months to $64.2 billion while New Payments Platform transactions grew 82.8% to $77.2 billion.
Carrying the costly overheads tied to shopfront overheads, many of the Big Four simply haven’t been able to compete on certain banking products offered by their digital-only challengers that pass savings onto their customers.
Here are three ASX-listed fintechs well positioned to benefit from the decline of traditional banking through their wholly-digital financial services.
Novatti Group (ASX: NOV)
Market Cap: $155 million
Share Price: $0.51
Novatti Group is set to be the first neobank listed on the ASX if they receive the banking licence in the coming months, following the resumption of licence issuing last month. Novatti first submitted the banking licence application in 2019 before the regulator shut down new licence issuing through the pandemic. Building their digital payment capabilities over that time, Novatti is primed for the launch of a banking business having already formed key partnerships with Visa, Apple, Google and Samsung for mobile payments.
The Company already processes more than $2.3 billion in transactions annually and is set to be the card issuer behind CryptoSpend – a Visa card that enables users to pay for goods in Bitcoin with merchants to receive AUD.
With their potential neobank already funded via a $15m funding commitment received in April, Novatti has all the in-house knowledge to quickly grow a banking, lending and merchant acquiring business.
Separately, Novatti is well cashed up for growth in the sector via M&A following a $40m institutional placement last month that secured a 19.9% stake in accounting software company Reckon (ASX: RKN) which has 100,000 business customers. The remainder (approx. $20m) is committed to further growth initiatives with the Company having shown an appetite for acquisitions, last year acquiring profitable business automation company Emersion which they have since expanded into the United States.
Wisr (ASX: WZR)
Market Cap: $381 million
Share Price: $0.29
Despite having a loan book of more than $600 million in personal loans as a neo-lender, Wisr and their discounted lending rates are still widely unknown amongst Australians.
That will likely change within the next two weeks however with Wisr launching the biggest marketing campaign in their short history by partnering with Channel 7 as a broadcast partner of the 2020 Tokyo Olympic Games.
Recently reporting their 20th consecutive quarter of loan book growth, Wisr has seen strong momentum from new products offered, including vehicle finance where discounted interest rates derived from their financial wellbeing metrics have been particularly popular.
With Australians continuing to be disgruntled by credit card interest rates attached to Big Four cards, the debt consolidation products offered by Wisr at rates as low as 6.49% pa. These could become much more popular soon given the amount of exposure they are getting as a broadcast partner of the Olympics.
Humm Group (ASX: HUM)
Market Cap: $470 million
Share Price: $0.95
There are Buy-Now-Pay-Later providers that are more popular than humm, but no one gets a credit card for $1,000 purchases. Unlike said providers, humm allows for large purchases up to $30,000 with interest-free terms available.
In the June quarter alone, humm processed $774.9 million in transactions from their 2.7 million customers as the BNPL provider of choice in Australia for large purchases.
Unlike their competitors, humm is profitable and has established infrastructure in place which provides the company with defensive mechanisms in the event of regulatory change. Subsequently, the Company was least-affected amongst the BNPL sector when it was confirmed Apple would be entering the space off the back of Paypal doing the same.
At present, humm is actively expanding its BNPL services across New Zealand, the United Kingdom and Canada and are expected to deliver their Full Year results on August 19 where they will likely be the only BNPL operator to distribute a dividend.
*Owners of this website are shareholders in a company mentioned in this article and have been engaged by them to assist in investor communications
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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