Ubank and Up are a new breed of digital banks. Each has won 700,000 customers, attracted to features big banks struggle to provide on their legacy technology.
Last year, National Australia Bank decided to rebrand its ubank subsidiary, avoiding the red and black colour scheme of its parent. Since then, the bank has found, its customers are skewing younger – and there are more of them.
Between April and June, 58 per cent of new ubank customers were under the age of 35, with 28 per cent aged between 16 and 25. Most are using it for payments. This compares with 20 per cent of existing customers being under 35 and using it mainly as a “rainy day” savings account.Banking younger customers is a core battleground for lenders; after all, those in their 20s, who mostly use banks for payments and saving, could become future mortgage customers.
Meanwhile, ANZ is creating ANZ Plus as an alternative digital offering. It said in May that it had attracted 260,000 customers, one-third of which are new to the bank. Overseas, Standard Chartered Bank is a 60 per cent shareholder in Trust Bank, which launched last September in Singapore and has already surpassed 500,000 users.
Anson Parker, chief product officer of Up, says traditional banks provided an opportunity for the upstarts by building “broad church” offerings. “This can lead to a bland, expansive, one-size-fits-all experience,” he says. Rebuilding ubank has created plenty of challenges for NAB. Many former 86 400 staff left, citing a culture clash. The migration to the new ubank had to be paused in December, after wait times in its call centres blew out as frustrated customers sought details about changes to account numbers, new cards and on how to work the new app. Ubank was forced to double call centre staff, and only restarted the migration in the new year. But that work has now been completed.
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