Largest single investment in an Australian neo-bank or startup

“We think this is the largest single investment in an Australian neo-bank or startup and with exceptional customer acquisition and deposit growth, positions Xinja as a front runner in the Australian neo banks market”. 24/03/2020. Eric CEO

This announcement is still on the Xinja website, it still says $160m will be invested immediately and the remaining $273m over the next 24 months.

It is now 3 and 1/2 months later and no money has been received from World Investments, deposits have fallen ( as per Regulator stats) and going by app ranking I have to assume customer acquisition is no longer exceptional.

I appreciate the brief comments in the last investor update ( largely blaming Covid19) however it does seem like it’s time to update the website rather than let current and future investors ( people are offering to buy and sell Xinja shares on this site), journalists and customers think this much trumpeted investment has happened.

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Hi @XinjaInvetsor :wave:

Thanks for pointing this out. We’ve added an update at the top of the original news item on our website saying that the investment has ben delayed.

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Thanks for following up. You might need to have a look at multiple parts of the site. Eg the AFR article is still there suggesting the investment would be immediately ( with quotes from Eric). Likewise there are all the congratulations comments in this forum and on your social channels.

While you are at it suggest other areas to look at on the site include “Why can’t I open a stash account” - this is very misleading as it says ‘rather than reduce rates you decided to stop new accounts’ as the sole reason. Of course you did reduce rates and yet the stash account still remains closed. Commentary seems to have shifted from shortly, to mid year to now July to Sept. should we assume this is another moving target like the roadmap ? So holding the rate can’t be the actual reason. Probably not then, definitely not now because you have reduced the rate.

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Hi there @XinjaInvetsor, we don’t normally update the news section of the site because it is that - news - and has a date on each page. Similarly, we haven’t gone back to every press release from before we were a bank to say 'we aren’t a bank yet, or ‘we will be bringing out the bank account next year.’ Sometimes we have captioned ,however I think people will understand the date of that AFR article as with previous AFR articles. Similarly, we don’t go back thru the forum or our social media deleting historic comments made by members of the public - the date is clear in the context.

We DID hold off reducing rates, and not opening new accounts allowed us to keep the rate higher for longer. However, the RBA then dropped the rate again, so we couldn’t hold off dropping our rate indefinitely, and we had to at that point both drop the rate AND keep Stash closed to new customers. With the delay in receiving the investment from WI thanks to COVID we have to run lean, which means we can’t think about opening up Stash again until we have a lending product live to offset it - the other side of the balance sheet, so it’s unlikely we we’ll open Stash until that’s up and running, unless something unforeseen allows us to do so.

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Perhaps you shouldn’t try and be so clever with your language. You clearly said you were pausing opening stash accounts so you could hold the rate. ‘Others’ you said would reduce the rate but you are different. Then you reduced the rate and haven’t reopened stash. First the story was about holding the rate, then the story was about World Investments delay, now the story is you are not going to open the stash account until you have lending live ?

So the next logical question Is what volume of loans do you need before you will reopen ? Last time I checked you had $500m in deposits. Are you not going to open stash until you have $500m of loans written ? If you are starting with personal loans at say an average of $5000 per loan you would need 100,000 personal loans. I assume that is more than 2 or 3 loans for every Xinja customer and given many joined for the saving rate I assume many do t even need 1 loan.

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OK - trying NOT to be clever with language here - every time the RBA drops rates, it costs us more to maintain the rate we have. The first time, we maintained it because we’d only just launched the product, and so it felt like the right thing to do to keep the rate and afford it by not taking on more accounts. But then they cut the rate again - we couldn’t afford to maintain the same rate after that. We need money to pay the interest - short term this can come from investment if we have enough - and overtime we’ll build a lending book, so it’s not one or the other but one transitioning to the other. We can get going again as soon as we have enough money and have started lending at least. We don’t need to lend out 100% of our deposits and we don’t expect that many of our customers to need personal loans at the moment, as by definition many of them have deposits so they won’t need loans - so we see think most customers for personal loans will be new. We are also planning to launch home loans at the end of the year/beginning of next which as you can imagine has an impact on the model as well. Hope that clarifies it a bit further.

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Hi,

Any update on this. I’d the investment going to go ahead. Can you tell us a likely date when Xinja will receive the money if they will receive at all.

Hi @Gio - thanks for getting in touch :blush:

We’re in regular contact with WI. The UAE was hit hard by COVID 19 hence the delay. We still expect the deal to go through before the end of the year however nothing is certain, not least the timeframe.