The International Bank of Australia has taken its first steps to becoming a household name, having been granted a restricted banking licence.
This segment has been ignored within Australia’s banking sector yet contributes more than $100 billion per annum to the Australian economy.
Securing the RADI (Restricted Authorised Deposit-taking Institution) has been a three-year process for International Bank of Australia with the bank currently 91% owned by fintech company, Novatti Group (ASX: NOV).
CEO of International Bank of Australia, Guy Carvalho, said: “A key focus for the bank will be partnering with fintechs such as Novatti who need an innovative and nimble banking partner. For a long time, we have known that traditional banks have not been able to keep up with the requirements of the disruptive business models of fintechs, particularly those offering alternative ways to make or accept payments, domestically or internationally.”
“IBOA will overcome this challenge, leveraging technology to enable the seamless end-to-end movement of money”
International Bank of Australia has an advantage on the other so called neobanks in Australia with access to prospective overseas customers already. International Bank of Australia has commenced working with migration agents, education providers and tourism operators to address a major challenge faced by migrants, international students and tourists coming to Australia – getting connected into Australia’s banking system.
“The bank will be able to leverage Novatti’s existing payments ecosystem and global operating base to reach potential customers overseas and enable them to set-up bank accounts and transact before they even set foot in Australia,” added Carvalho.
“This is an incredibly unique service which will provide significant value to potential customers who want to get their lives sorted before arriving in Australia.”
Some of the common pain points encountered by international arrivals in Australia have been difficulties in gaining full account access. In many instances, migrants have been able to transfer money from an international bank account to an Australian one, but not be able to use that money until undertaking in-branch verifications. Through their partner network, International Bank of Australia can verify customer identities from their home country, enabling them to transact from an Australian bank account in AUD prior to arrival.
This is especially valuable to international students and skilled migrants who need to set up payments ahead of their arrival with the lifelong value of that customer substantially higher than the funds transferred to set up their new lives.
According to International Bank of Australia, migrants and tourists contribute more than $100 billion in payments to the Australian economy via international students ($6.8bn), skilled migrants ($12bn) and international tourists ($90bn).
For Novatti Managing Director, Peter Cook, the granting of a RADI licence to International Bank of Australia offers additional opportunities for the digital payments company to expand its offering.
“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,” said Cook.
“This is why the delivery of this licence and now the launch of International Bank of Australia, has formed a core part of Novatti’s growth strategy for so long. In addition, the bank has the strong advantage of being able to leverage Novatti’s existing payments ecosystem and global footprint to help win customers quickly.
“We are absolutely delighted to be able to now move ahead and launch the International Bank of Australia with a name that speaks to Novatti’s truly global ambitions.”
Already one of the fastest growing payment processors in Australia, Novatti recently reported $10.5m in sales revenue for the quarter ended 30 September 2022. The launch of International Bank of Australia kicks off an exciting month for Novatti which is set to be distributed a $12.8m dividend via their strategic stake in accounting software company Reckon – itself having flagged plans to offer business banking services to its 117,000 users.
Jarryd is an experienced Investment Adviser at Emerald Financial Group
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