Why we switched to 86400 — one of the most promising neobanks in Australia.
In December 2020, my hubby and I decided to checkout neobanks available in Australia. I first learned about the term “neobank” from the Australian Finance podcast which I also just started listening to last year.
A Neobank is fundamentally a new breed of bank that operates exactly like a bank but without the presence of physical branches. Customers normally access banking services through a mobile app.
This article explains what inspired us to check out neobanks, and elaborates our selection criteria and the reasons that made us switch to 86400. It also includes a feature comparison chart between Up Bank and 86400.
Disclaimer: The information in this blog is both personal opinion and general information based on research done at a particular point in time.
It should not be taken as constituting professional advice from the author.
The author is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the article information relates to your unique circumstances.
The author is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this blog.
Why did I even bother looking into this when I already have a bank?
There are 3 main things that attracted me to try the new kids on the block.
- Neobanks, being exclusively digital, claim to provide better online services specifically from their mobile apps. They can focus more on improving user experience in their apps since they do not have the overhead of running physical branches. I hate going to bank branches and the same goes for calling their hotlines. I prefer doing everything online when possible.
- As a startup company, they are built from the ground up on top of modern cloud-based technology platforms and not tied with traditional banking legacy systems. That means they can be more agile in terms of delivering service features and adopts modern engineering practices. This sits well with me being a person in Tech myself.
- Since they need to challenge the existing banks, especially the Big 4, neobanks offer a much higher interest rate on their savings account and known to not have any bank fees.
But are there any catches? Can these banks be trusted with our money?
Given that the Australian Prudential Regulatory Authority (APRA) has granted the bank the Authorised Deposit-Taking Institution (ADI) licence, deposits up to $250,000 are protected by the Australian Government through the Financial Claims Scheme (FCS).
Registering a new account can be done within 15 minutes given you have all the identifications handy. I convinced my partner to give it a try. If we happen to not like it, we can just ditch it. Right?
At the time of our exploration, there were 4 neobanks in the running — Up Bank, 86400, Xinja, and Volt.
Before making any moves, we had to agree on our selection criteria. We basically asked ourselves this question — What would make it worthy to migrate to another bank considering all the effort and anxieties that come with it?
We have identified a couple of high priority features and categorised them into KEEP, MUST HAVE & WANTS.
5 Features to KEEP
Features that our existing banks offer that are mandatory for the new banks to have. We are happy with these features and we don’t want to lose them.
- Implements security measures — verify identity, pin codes, face id/biometrics, 2-factor authentication.
- It has to support BPAY. We currently pay bills fully online via the bank web app.
- It has to support direct debits. We currently have an auto-debit setup for a total of 9 merchants. Paying them manually every month/quarter is not an option.
- OSKO! Who doesn’t want instant payments?
- And lastly, ADI licence.
5 MUST HAVE Features
It wouldn’t be worth the migration without having the features we believe are gonna change the way we do banking for the better.
- It has to have a savings account with high interest → not less than 1% p.a maximum interest and conditions are achievable. My current bank only provides 0.55% p.a. maximum interest — 0.20% base rate plus an additional 0.35% if the balance is greater than the previous monthly balance. So down to 0.20% if I make any withdrawals.
- Ease of creating multiple transaction and savings accounts via app. We want to be able to separate accounts for a more organised tracking of expenses and saving goals.
- Ease of creating multiple joint accounts via app. Yes, shared account is a must! I personally want full visibility of all the expenses and savings progress. Basically all the ins and outs of cash flow.
- Zero bank fees.
- The potential of the bank to offer more useful features in the near future.
The WANTS
The WANTS are nice to have but we can live without them for the time being.
At the time of exploration, Xinja has discontinued their Stash account (savings) and Volt is still in Beta and requires invitations to try the product. So we’re left with Up Bank and 86400. Check below the comparison chart that we’ve prepared.
Note: Xinja has returned its ADI licence and is no longer operating as a bank.
Up Bank vs 86400
The decision: 86400 emerged as the winner
We decided to register for both banks to have a feel of their apps. To be honest, we really liked that Up Bank has an in-app chat, spending categorisation, and unlimited savings account. I mentioned that I hate going to physical branches and calling banks. The chat app is a very convenient way to quickly inquire about anything. My hubby really liked this feature! The unlimited savings account will help us organise both our long term and short term savings goals. 86400 only allows up to 3 savings accounts. There is also an interest cap that is restricted to 50k per account with 86400. There are just more enticing features that Up Bank offers like international bank transfer and future features like budgeting. To add more icing to the cake, Up Bank’s UX design is heaps and bounds better than 86400. They show merchant logos on transactions! Also, check out this features tree by Up Bank which we find both informative and sophisticated. But hey, it cannot be ignored that 86400 offers home loans and offset accounts. With 86400, I can view all my accounts from different banks in one place.
The deal-breaker is the availability of joint accounts which only 86400 offers. It is a non-negotiable feature for us. Good move on 86400 to prioritise this one! Another good news is, Up Bank is working very hard to get this feature done soon. We’ve decided to switch to 86400 in the meantime to take advantage of the improved interest rates at the start of the new year and get started with our joint accounts. We are loving it so far. The drawbacks of 86400 are something that we agreed are not an issue for us at the present time. But once Up Bank finally releases their joint account feature, we are highly likely to change boats.
What happens to our existing bank accounts? We’ve kept it for now and will keep our incomes deposited in the old accounts to have a fallback just in case. We opted to just transfer funds accordingly. We ensured that the old banks don’t incur extra fees with this setup.
At the time of this writing, Xinja, has already closed due to financial issues which raises the question — should we worry about 86400 having the same fate? 86400 aim to earn profit by raising deposits and they also lend money to home buyers where they can earn interest from. 86400 is also backed by Cuscal, Australia’s leading independent payments provider.
If you think 86400 is your kind of bank too and thinking about registering, you can use this referral code: 8UNVE3N to get $10 deposited to your account (if you make a purchase within 30 days). I will get $10 too. So it’s a win-win! ^_^. You can sign up in App store or Google pay.
You may also want to read
- An in-depth review of 86400 app and its features (coming soon)
