Xinja Bank is a new kind of bank that is not yet fully operational. In the next few months Xinja will launch new accounts and loan products. So what is it all about? In this InfoChoice exclusive, we talk to the chief of Xinja and answer your questions about this new kind of financial institution What is Xinja? Sydney-based Xinja Bank secured a full banking licence from the Australian Prudential Regulatory Authority last week. Xinja is not a traditional ‘bricks and mortar’ bank featuring branches, ATMs and big secure vaults with thick steel doors. Xinja Bank is a ‘neo bank’ – that means a 100 per cent online, digital bank. Australia has three other neo banks that have opened, or are about to open, this year – Volt Bank, Judo Bank and 86 400. The only way to find Xinja Bank is online – and the only way to use Xinja is on their mobile app for iPhone and Google. Xinja will only offer products and services through its mobile banking app. What loans, accounts and products does Xinja offer? Xinja Bank started with a prepaid card before the full banking license was granted. Now Xinja Bank has launched a transaction banking account linked to a debit card. The Xinja transaction account became active and started being used by actual customers on Monday 9th Sept, the same day that the Australian Prudential Regulatory Authority granted Xinja a full banking license. Opening a Xinja account takes literally just a few seconds and comes with a debit card that you can load into a mobile wallet or use at shops. The Xinja account has zero ATM fees and no card or account fees. Xinja are rolling out additional features, products and accounts with each new app update. They expect to be adding a savings account, called ‘Stash,' in October or November 2019. Xinja chief executive Eric Wilson said Xinja loans will be launched early in 2020 but the bank will not be issuing credit cards. Xinja promises a better savings account Xinja have not confirmed the interest rate for their new savings account to be launched soon because that rate depends on the Reserve Bank’s official interest rate at the time. But they are making some very big promises about a better deal for savers. Xinja have confirmed that their headline savings account rate will be their base rate. Xinja founder and CEO, Eric Wilson told InfoChoice that base rates and bonus rates offered by most other banks and credit unions “can be misleading.” “The very common practice of banks headlining an attractive rate that has all sorts of caveats and strings attached to it, and keeping a relatively low base rate in the background, is not great for consumers, and can be misleading. “The very common practice of banks headlining an attractive rate that has all sorts of caveats and strings attached to it, and keeping a relatively low base rate in the background, is not great for consumers, and can be misleading. “Too often you see 2.5% in the foreground, only to find something like 0.5% in the small print.” At Xinja we prefer to be more transparent and to give all our customers a great rate,” said Eric Wilson. “So our base rate will be as good as or better than many banks' bonus rate. We'd also consider offering a bonus rate on top of that in the future.” Xinja could be a great travelling companion The Xinja account and debit card also features zero international ATM withdrawal fees and zero currency conversion fees. That will be great relief for travellers who are totally over the high cost of taking their Australian bank issued credit or debit card overseas. Is Xinja a legitimate bank? Xinja, and the other neo banks, have had to work hard over a long period of time to convince Australian banking regulators to issue a banking license to them. On the 9th September that work paid off when the Australian Prudential Regulation Authority issued a very short statement. “APRA has granted Xinja Bank Limited a licence to operate as an authorised deposit-taking institution without restrictions under the Banking Act 1959.” But just because Xinja is legit, doesn’t mean it is the same as other banks you are familiar with. In addition to the refreshingly different savings account – with no base rate / bonus rate games, Xinja has a different way of doing a lot of things. Eric Wilson says the Xinja Bank business model is based on “win-win.” Simply put, Xinja think that if they treat their customers well and help them make more out of their money, their customers will stay with them longer, take out more of their products, and recommend them to their friends. That’s not the way many other banks work. But that is just words, words, words – and banks are good at words. What does win-win really look like in reality? It means better rates the longer you stay with Xinja, so increasing the rates of interest on savings and reducing the rates of interest on borrowing over time. That’s turning the current bank business model on its head. And it’s kind of how Nana and Grandad used to think about banking – the manager will treat you well if he knows you. These days, banks typically offer intro rates, honeymoon deals, and discounts for new customers while their loyal customers can feel ignored. Is Xinja Bank safe? Just because neo banks don’t have branches doesn’t mean they aren’t serious safe havens for your cash. Xinja, as an authorised deposit taking institution is covered by the federal government’s deposit guarantee. Eric Wilson says: “Deposits are guaranteed in the same way as it would be with Commonwealth Bank.” You can research and compare transaction banking accounts from Australia’s banks, credit unions and neo banks at InfoChoice. The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.