National Australia Bank will acquire neobank 86 400 as part of its strategy to grow its digital-only subsidiary UBank.
The major banking group confirmed on Friday it would acquire full ownership of 86 400 for $220m, noting the takeover was primarily to grow UBank’s customer base and enhance its digital banking technology.
NAB’s acquisition of a smaller player is the latest consolidation in the neo-banking sector after the collapse of Xinja last year.
Neobanks before the pandemic were tipped to be a sector disrupter by offering better deposit rates and lower lending rates to digital-savvy consumers.
86 400 entered the industry in 2019 and offered home loans and deposit accounts.
As of January 15, 86 400 had more than 85,000 customers, $375m in deposits and $270m in approved residential mortgages.
NAB chief operating officer Les Matheson said the takeover would provide consumers with a more competitive banking alternative.
“Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace,” Mr Matheson said.
“The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers.”
NAB acquired a 18.3 per cent stake in 86 400 late last year through a Series B capital raising and the completion of the takeover will be subject to approval by the banking regulators.
UBank chief executive Philippa Watson said the new technology would help to deliver faster banking solutions for its customer base of nearly 600,000.
“Combining with 86 400 will bring together UBank’s established business and 86 400’s experience and technology platform to meet the changing needs of our customers,” Ms Watson said.
“We are looking forward to having the 86 400 team join us to deliver the next generation of simple, fast and mobile banking solutions.”
The 120 staff working at 86 400 will become part of the NAB workforce.
“This will significantly fast-track our growth, propelling our business, customer numbers and balance sheet to a position which would’ve otherwise taken five years,” 86 400 chief executive Robert Bell said.