Having built one of the most comprehensive networks of banking service partners over the past two years, digital payments company Novatti Group (ASX: NOV) has been noticed on the global stage, securing $18 million in funding for the launch of their planned neobank.
The funding commitment comes from BC Investment Group (BC Invest) which offers financial services around the world, boasting a mortgage loan book of more than $1.1 billion. By joining forces as strategic partners, Novatti secures the funding required to launch their neobank upon regulatory approval while also gaining access to BC Invest’s lending and asset management expertise which are likely to become neobanking services.
“Developing Novatti’s new banking business is a key pillar of our long-term growth strategy to provide value-add to our existing, established businesses,” said Novatti Managing Director Peter Cook
“To this end, we are delighted to have secured this strategic partnership with BC Invest, who bring with them strong financial services capabilities, including through their existing lending operations, as well as key customer acquisition channels.
“In particular, these capabilities will be invaluable in bringing income-generating products, including lending products, to market, which APRA has made clear is a priority for all banking licence applicants in addition to their deposit taking credentials.”
Identifying Novatti as a rising player in Australia’s banking industry, BC Invest will invest $15 million into Novatti’s unlisted banking business subsidiary, NBHC. A further $3 million will be invested in NOV shares via Private Placement to accelerate Novatti’s other digital payments services that will eventually power the neobank. These services include card issuing, merchant acquiring, cross-border payments, remittance services, billing automation and regulatory compliance.
Following BC Invest’s investment in NBHC to secure a 19% stake, the banking business subsidiary is valued at $35 million with Novatti owning 57% amongst other smaller investors.
While the majority of Novatti’s services are targeted towards businesses, the emerging fintech has maintained one eye on its banking customers since submitting their banking licence application in 2019. This focus has led to Novatti partnerships with Apple, Google, Samsung and Visa for seamless integration of their services into the world’s most popular smartphones which modern customers have declared as their preferred means of banking and payment.
“Today we have cemented a long-term strategic partnership with both Novatti and its banking business,” said BC Invest CEO, David Hinde.
“Our focus now is threefold; (i) to assist the Novatti team to secure its banking licence and create an immediate pathway for a profitable and scalable lending business; (ii) provide our growing customer base with access to Novatti’s card and payment services ahead of transitioning our customers to the transactional and service platform that will be provided by the proposed digital bank; and (iii) continue our work with Novatti to deliver payments and card solutions to our domestic and international customers and assist us in the development of our technology platform.”
Now with more than sufficient funding to launch their neobank upon regulatory approval, Novatti is well positioned to transform the banking landscape in Australia. From their existing services, Novatti recently delivered $4.15 million in revenue for the March quarter which represented a 37% year-on-year increase.
Having first submitted their application to the Australian Prudential Review Authority (APRA) in 2019, Novatti would likely have secured their license much earlier had COVID-19 not stopped the issuing of new licences. Now in the backend of the pandemic, APRA resumed reviewing applications in March 2021 with Novatti firmly on their agenda.
Processing more than $25 billion per annum across their digital payment services, Novatti has a global payments ecosystem which has the fintech well positioned to offer banking services to existing customers.
Given the backing of BC Invest, which is majority-owned by Far East Consortium International (HKG: 0035) which has a market cap of HKD$6.5 billion, Novatti has added another Tier 1 partner to their rapidly growing digital payments and banking network.
Just last week, Novatti was selected by Afterpay for the BNPL company’s launch in New Zealand while another partner Marqeta, which appointed Novatti as their Australian partner, is eyeing their own $10 billion IPO.
*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 a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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