
Australia’s banking regulator stated on Thursday, March 18, that it will set stricter requirements for companies seeking banking licenses and increase scrutiny of new entrants in the market, reported Reuters.
The Australian Prudential Regulation Authority’s (APRA) move highlights concerns around so-called “neo-banks”, licensed in recent years to improve competition as the “Big Four” lenders dominate nearly 80% of the banking market.
Several such online banking firms, including Xinja, 86 400, and Volt Bank, have already or are due to disappear, some of them before even starting to lend money to people.
The APRA stated on Thursday it had begun a consultation process on its new approach, which will focus on longer-term sustainability of firms over the short-term aim of getting a license.
“New entrants will start from a stronger capital position and be ready to attract depositors and earn revenue immediately…and should they ultimately not succeed, they will be better placed to exit the industry in an orderly fashion,” APRA Deputy Chair John Lonsdale said.
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