Fintech Insider Podcast by 11:FS
00:27:43 · Ross Gallagher
[00:27:43] S0: No. I think at a time when we're being bombarded with negative news, I think it's nice to go to break on a positive story. We will be back very shortly. This podcast is brought to you by Stake, the digital brokerage app bringing you unrivaled access to The US market. Invest in over 3,500 US stocks and ETFs, including game changing companies like Google, Amazon, and Tesla. Trading is instant, direct, and commission free. And with a fully digitized sign up, you'll be in the market in minutes. So visit hellostake.com or search stake trade to seize The US market's $31,000,000,000,000 worth of opportunity today. Here at ElevenFS, we deliver work all over the globe. From North America and throughout Europe to The Middle East, South Africa, and across APAC, we've helped clients deliver truly digital propositions. With that in mind, we've added an exciting new page to our website. If you head over to 11fs.com, you'll see a new page in our top nav called work. We've got some brand new case studies for you to look at. They feature some of the companies and propositions that ElevenFS have worked for. There's interesting stuff up there with RBS, Virgin Money, Grab, and Atom Bank. Head over to the ElevenFS website and have a look. And if you think we can help you build truly digital propositions, then drop us an email via hello@11fs.com. Now on to the international news. Our next story comes from Finextra and concerns Zynga barring new customers after interest rates drop. The Australian neobank is no longer letting customers sign up for its 2.25% savings account. This comes after the RBA and has a 0.25 percentage rate cut and has left Zingja weighing up the cost of servicing an account that has already attracted what's really quite a staggering 350,000,000 Australian dollars in deposit inflows since its launch in January. So while Zynga can hold deposits, it hasn't launched its credit or loan offerings yet, and the account is thought to cost the bank 7,500,000 Australian dollars per year just to keep afloat. So I've got a couple of quotes here from Zynga CEO Eric Wilson that I just wanted to throw out there. So I think he was trying hard here to put a positive spin on things. He said, as always, Zynga wants to break the traditional banking model. When faced with higher than expect...
00:30:04 · Ross Gallagher
Expected deposit flows and an RBA rate cut, most banks would just drop deposit interest rates, hurting existing customers while chasing new ones, and that's not what Xinji is about. He said managing these costs as a new bank in a way that cares about existing customers means pushing the pause button on opening new accounts for a while. So I guess I'm most interested in sort of getting people's thoughts on that little bit of spin in the first instance.
00:30:32 · Sarah Kocianski
[00:30:32] S1: So we we know how I feel about the Australians. You know? They... I'm I'm very, very fond. I think... I I actually think that it is spin, but I also actually think it's the right decision. Because the reason that, you know, Zynga has has this rate out there, and I should point out as well that most of the neobanks in Australia have similar rates. So 80 6,400 and up both have the same 2.25% rate. That's the rate when you add up the base rates. The base rates are about point 4.5%, and then you have like a bonus rate, which you get depending on whether you adhere to certain rules. So 86,400, you have to deposit $1,000 a month. Up, you have to make five deposits per month into the linked payment accounts. You can't just have a savings account, you've got to be using the linked current account, if you like. So they they... Basically, it's a market standard out there for for the near banks. Volt is another bank that's got 2.15%, but, you know, it it... It's up there. It's good if you think about the rates that we're seeing over here. And those aren't those aren't fixed term rates. Those are easy access rates. So Zynga has done this, you know, as the other banks have done to gather customers, to get customers through the door, to get customers using its product. And, you know, obviously, off the back of that, to start getting their feedback to see, you know, what they should be doing next. The last thing it wants to do is let go of all those customers and all those deposits that it's successfully accumulated by slashing the rate. Because those other banks are offering the same rate and haven't cut theirs yet, and I will say yet. The minute it cuts that rate, all that's gonna happen is those people are gonna go to 86,400 or go to up, and it loses that advantage it's gained. So whilst I do appreciate that it could be viewed as spin, I actually think it's a very sensible decision. And And I think if also to go back to your point, Ross, about just how much they've accumulated, like 350,000,000 in dollars, they are very, very close as far as I understand it to launching their mortgage product. So they don't wanna be giving up that deposit just as they're on the cusp of launching a lending product, which they comprise very attractively because of aforementioned rate cut. So I think there's two things here that are interesting to me.
00:32:33 · Sarah Kocianski
One is that the Australian market is a little bit unusual in this sense that all the banks have gone for such high interest rates. So over here, the neobanks used free travel as kind of the the catch to get you in. The Australians have gone for high interest rates as a catch to get you in. So that's unusual. And then also, you know, kind of the way that the way that they've done it, I think, is is to be applauded, actually.
00:32:55 · Valentina Kristensen
[00:32:55] S3: I mean, I I guess I I don't really get the strategy. Right? I mean, I understand, okay. Fine. They're trying to raise these deposits because they're looking to lend out in the future, but it's very expensive. Right? I mean, they said the the 350,000,000 that they've they've raised is gonna cost them $7,500,000 per year, you know, in in annual interest costs. So they have to kinda start deploying that capital pretty quickly. I think when you're a bank like Marcus or a player like Marcus, you've got incredibly deep pockets because you're obviously coming from Goldman Sachs, then it looks super strategic offering a a rate that's sort of miles ahead of others in the market to attract those those customers in because you can afford to do it for the next year, and then rates will drop. I kind of feel like if you're doing it now, you know, as soon as you come into market, it just looks a bit amateurish, you know, like, you're the the new guys who supposed to be coming in build... Building a professional new banking sector, and you're actually then... The only way you seem to be able to differentiate is by being either the cheapest or by offering, you know, the the the best rate.
00:33:55 · Pranav Sood
[00:33:55] S2: Yeah. I think that's a really interesting point. It it is a a bit weird that the only thing that you can differentiate on is is exactly that, the rate. It's quite interesting to me because yes, they've got $350,000,000 in deposits after two or three months, which is fantastic. But that's still a drop in the ocean relative to what the big four banks in Australia have got already, right? And you'd expect and hope that by providing something a little bit better, either from a digital experience or a user journey perspective, that you could differentiate enough to win some more of that, you know, dollars 500,000,000,000 worth of, you know...