Challenger bank Hay enters the Australian neo-bank race for a banking licence

By Aisling Finn on Wednesday 19 February 2020

Digital Banking

The first 10,000 customers to sign up will become ‘Hay Founders’, receive a limited edition card and gain early access to all Hay’s new products.

Challenger bank Hay enters the Australian neo-bank race for a banking licence
Image source: Hay

Hay Technology, an Australian fintech, announced it has applied for a deposit-taking banking license to the Australian Prudential Regulation Authority meaning they are well on the way to becoming the newest Australian challenger bank.

Sydney-based Hay already has an Australian Financial Services Licence (AFSL) and has also submitted an application to APRA for a Restricted Authorised Deposit-taking Institution licence.

The mobile banking app uses the New Payments Platform for instant transfers in and out and, like other digital banks, will send you real-time notifications to your smartphone or smartwatch.

Several members of Hay’s leadership team come from Shawbrook Bank, a UK-based challenger bank launched in 2011 that specialises in providing financing to SMEs that they may struggle to obtain from traditional banks.

The fintech has also opened a waiting list for its first 10,000 customers who will receive a special ‘founder’ card and get early access to Hay’s future launches.

The Australian neo-bank boasts no set-up, monthly, transfer fees or foreign exchange fees with the Visa exchange rate. 

When you travel abroad the app will automatically switch your balance to the local currency and customers will be able to withdraw up to A$500 free of charge.

Andrew Laycock, a former hedge fund manager and CEO of Hay, said: “It is such an exciting time for fintechs in Australia; we are experiencing a revolution in banking services across the globe and it is now Australia’s turn”.

David Curry, Hay’s chief operating officer, added: said: “We have the advantage that a lot of our team have local and international technology and finance experience”.

“Many have directly participated in the UK neobank revolution, so we’ve seen first-hand what has and hasn’t worked and built Hay from there”.

Hay’s launch comes only a few weeks after it was revealed that Australian high street banks are facing huge losses as their digital counterparts are beginning to take over, with digital banks having received more than A$1bn in deposits since their launches.

According to research from EY, consumers are rapidly switching to digital banks with 58 per cent of “digitally active Australians” now using a fintech service of some sort—up from 37 per cent in 2017. 

Similarly, the Commonwealth Bank of Australia has built a A$300m stake in pay-later challenger Klarna and has also partnered with KPMG and Microsoft to launch a new incubator for 25 Australian startups.

Sign up for our newsletters

Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.

AltFi's new weekly US newsletter breaking down the ins and outs of America's burgeoning fintech sector. Delivered Monday 9am EST/ 6am PST.