Metro Bank founder joins digital challengers in Australia 

Serial banking entrepreneur Anthony Thomson, co-founder of Metro Bank in the UK, is helping to set up a new digital bank in Australia that aims to shake up a market dominated by the Big Four institutions. 

The bank, named 86 400 after the number of seconds in a day, is initially being funded by Cuscal, an Australia payment services company. It plans to launch current and savings accounts in the first quarter of 2019 following receipt of a banking licence. More products, including mortgages, will be added later. 

“This is like UK banking on steroids — [Australia’s banks] really have been ripping off customers,” said Mr Thomson, who will be chairman of the new bank.

Australia’s banking market is dominated by Commonwealth Bank of Australia, National Australia Bank, Westpac and ANZ, which control three-quarters of the market in most product categories, including mortgages. They are among the most profitable banks in the world, although they have recently become the target of tougher regulation following a string of scandals that prompted the government to establish a year-long public inquiry into the sector. 

86 400 joins a number of other digital bank start-ups in Australia, such as Xinja and Volt, which were granted restricted banking licences earlier this year allowing them to provide a limited range of products.

Mr Thomson, who is relocating to Australia, said there was a real opportunity for a digital bank that would provide a full service to customers via their mobile phones. 

Analysts, however, said the new bank would face a tough task to compete against the incumbents, which benefit from low costs of funding and their dominant position. 

“Australia has had new entrants before including banks from the UK, Europe and Japan, as well as a new generation of ‘fintechs’,” said David Ellis, analyst at Morningstar. “But they have generally struggled to compete with the Big Four and I’m sceptical about whether a new digital bank will be able to have a major impact.” 

Mr Thomson said the bank would benefit from lower costs, compared to high street banks.

Cuscal, which made a A$15m ($11m) net profit after tax from its core payments services arm in 2017, forecasts the bank will need A$250m in capital over the next three years. It plans to bring in new shareholders next year. Mr Thomson is not an investor. 

Mr Thomson co-founded Metro Bank in 2010, the first high street bank to launch in the UK for more than a century. The company offered longer opening hours, speedy account opening and safe deposit boxes to challenge the incumbents. It has since grown to more than 55 branches and last year made it first annual profit, of £10.8m. 

Mr Thomson left Metro in 2012 to move into online finance. He set up Atom Bank, the first in a wave of mobile-only banking services to launch in the UK. 

Atom Bank, which Mr Thomson left earlier this year, has grown steadily to more than £1.6bn of consumer deposits and more than £1.2bn of loans. It recently raised £149m from investors, including its largest investor Spanish bank BBVA, which took the total raised to fund its expansion to more than £400m.