Xinja
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Xinja Get in on the bank job. Help us build Australia’s first independent, 100% digital bank.
  • Consumer Products
  • Finance
  • Mobile Apps
OVERFUNDING!

Minimum subscription hit - More equity on offer.!

  • A$1,066,000

    invested

  • 213.2% funded

  • 70 days & 2 hours

    time left

  • 1.2% - 7.0%

    min - max equity offered

  • A$500,000.00 - A$3,000,000.00

    min - max investment sought

  • A$250.00

    min investment parcel

INVEST IN THIS OFFER
Finance groups like ING as competitors

Sharing a question received via email:

'Your offer and risk document don’t mention finance groups like ING. I mention that because ING is essentially an online bank, and claiming similar benefits. I don’t know how successful they are in Australia, have they taken a significant proportion of the market, and hence is their experience pertinent, if they have remained small, is that a general indicator of the Australian market? Are they a direct competitor to Xinja, and if so is that an unidentified risk, and how would you mitigate it?'

Betsy Westcott posted on 19.01.2018

Hi Betsy and OP,

Thank you for the question OP. I think this question is best answered by the response I gave to Jackie Chen below where we talk about direct plays and ING as well as a couple of others.

Cheers

E

Eric Wilson posted on 19.01.2018

Replied to Betsy Westcott

A few questions

Hi Eric and the Xinja team,

Firstly, congratulations on your achievements to date. It's certainly exciting to see this level of innovation in Australia, especially in the banking sector and I wish you and the team all the success you deserve.

I have a few (okay maybe more than a few) questions around the numbers outlined in your offer document and your product offerings.

1. As with any start-up, it's certainly natural to expect that the business will run at a loss while customer acquisition and go to market strategies execute to their desired/beyond their desired result. However, I'm sure you, the C-level executives and the board have discussed a potential point in time where you will break-even or start to become profitable. Are you able to share your thinking and insight with the investor community as to when this might be?

2. Your other expenses in FY19 are forecasted to increase by over 50% compared to 2018. Could you share where these expenses are expected to be incurred? i.e. Borrowing costs, increased staff, IT support from Equal Experts?

3. You mortgage customer forecast for 2019 is 340. With interest rates expected to rise in 2018 and the opportunities that re-financing would bring, I would have thought the number would have been higher? Will definitely be higher if you offered something similar to what Atom offered in 2017 :) https://www.ft.com/content/c46c59d0-2514-11e7-8691-d5f7e0cd0a16 Can you share the reasoning behind this total?

4. Will Xinja be contributing/consuming comprehensive credit reporting information as the majors are/will be? If not, what’s stopping Xinja from being the lender of last resort if evaluating negative only credit information on applicants? I suppose more importantly what is Xinja doing to ensure it only attracts high creditworthy individuals to minimise defaults?

5. Your go to market and customer acquisition strategy outlined in the offer document talks about offering products that are highly competitive - With the difference between savings interest and loan interest rates being approx. 1% or less in some institutions I'm keen to understand how Xinja will be positioning themselves compared to other ADI's?

Thanks,
Nic

Nicholas Luiz posted on 16.01.2018

Hi Nic

Thanks for the thoughtful questions.

Just as a heads up, although we have attempted to provide as much detail as we can on the deal page and in the offer document that balances outlining all relevant information known at the time and regulatory requirements (incidentally we voluntarily provided the offer document to APRA and ASIC for prior feedback) - there is a limit to the granularity we can go to in a public forum for reasons of protecting our competitive intel and IP. That being said, here goes...

1. I am afraid ASIC have asked us not to provide more than 2 years of financial forecasts due to the uncertainty of forecasting beyond that time period. I would encourage you to draw your own conclusions from the two years forecasts we have provided, and to examine some of the other neobanks in market and their profitability to draw your own inferences. I appreciate that might not be the answer you were seeking, and obviously we have very detailed financial modelling, however we are restricted in a retail offering to the degree to which we can share that.

2. The increase in costs in Year 2 are incurred across all those areas you mentioned plus a couple of others. Year 2 is planned to see a substantial scaling of products and activity as the technology and the company in general beds down.

3. We have heard on a number of occasions from investors that we have been too conservative with our sales targets and profit estimates. We feel that it is far better to give prospective investors slightly pessimistic, hype free targets upon which to make a decision. If things go better, as you say they might, that is all upside for everyone!

4. At this stage we are not releasing the detailed plans for our credit assessment processes. I can however assure you that Xinja in no way will be the lender of last resort, and our credit assessment process will be as you would expect from a cutting edge, digital neobank. (Please note that we are not a bank yet.)

5. Firstly it is important to note that Xinja is not yet an ADI and we are dependent upon APRA to grant us that status. Our positioning compared to other ADI's is explained in the information in the deal room, and we dont have a whole lot to add beyond that at this point.

Thanks again Nic

E

Eric Wilson posted on 17.01.2018

Replied to Nicholas Luiz

Banking License

Hi Xinja Team,

What is the approximate time frame on Xinja being granted a banking license?

Cheers,

Lachlan

Lachlan Huismann posted on 16.01.2018

Hi Lachlan,

It is impossible to know for certain as being granted ADI status by APRA is entirely at their discretion. It is even possible in a worse case scenario that we wont be granted it at all...see my answer to Betsy Westcott below as to what happens if that occours.

All that said, we are making an informed assumption for our business planning that Q2 this year is a reasonable timeframe to expect a decision. It is worth noting that we were the first applicant for our RADI back in September of last year.

Xinja has also applied for an Australian Credit Licence (ACL) with ASIC which will allow us to offer mortgages and we hope to receive this in Q1/Q2 2018

Cheers

E

Eric Wilson posted on 16.01.2018

Replied to Lachlan Huismann

Shares issued to Equal Experts in lieu of fees

Do the shares issued to Equal Experts in lieu of fees equate to the amount of intangible assets in the balance sheet ("software development fund") booked at AUD1,234,247?

Damian Manchee posted on 15.01.2018

Hi Damian,

Thanks for your latest question.

The intangibles relates to the software development fund. The amount paid to EE does not equate to the amount of intangible assets, but it is a component of the total intangible assets.

Cheers

E

Eric Wilson posted on 15.01.2018

Replied to Damian Manchee

Billion Dollar Company

Hello, do you reckon Xinja has the potential to become a future billion dollar company? With the way technology is going and everyone using smartphones to run their life, this may become the Uber or Snapchat of banking :)

Michael Puser posted on 14.01.2018

Hi Michael,

Obviously these things are incredibly hard to predict and you need to make your own assessment.

Personally I think this excellent question is best answered with:

https://goo.gl/UE7Gng

NB. You should not rely on the fluffiness or cuteness of any pictured stuffed unicorn when making your investment decision.

E

Eric Wilson posted on 15.01.2018

Replied to Michael Puser

Has xinja self assessed the ESIC or requested a principles based ruling

Hi there, firstly, love what you guys are doing!!

Secondly (and sorry to be boring) I have an Early Stage Investment Company question. I don't think your answer above was 100 percent clear.

As I understand for a company to be an ESIC they either self assess against the 100 point innovation test or they request a principles based ruling.

To this end (and understanding all the caveats on getting personal tax advice) have you guys performed the self assessment? If so what as the result? And if not, are you in the process of requesting a ruling?

Thanks, keep up the great work!

Alexander Brown posted on 13.01.2018

Hi Alexander,

Thanks for the kind words! We love what you are doing too! Asking good questions :)

We are bankers and love questions about ESIC, so dont be sorry! They arent boring at all.

We have performed the self assessment and believe that Xinja is an ESIC. I have to repeat again though, that you should seek your own advice on this, and not rely on our opinion, especially if this is of critical importance to your investment decision.

All the best

E

Eric Wilson posted on 13.01.2018

Replied to Alexander Brown

Resolve from selling share query.

Hey Eric, thank you for your prompt response. I have since discussed this further with Equitise and you were absolutely correct about ownership of the shares.
They had explained the same thing you had in response to Scott Lang and that specific acknowledgment I referred to is about the illiquidity of the start up point. But in the event (later on) Xinja is on the market or an event of offering should occur then the holders can indeed sell their shares if they wish to.

To this end I have decided to keep my investment and apologise for my misunderstanding of this. I look forward to the future of Xinja in becoming a monumental success.

Also thank you to Equitise for being equally as prompt and diligent in ensuring I understood the matter more clearly.

Heath Smith posted on 13.01.2018

Hi Health,

Thats great news, really happy everything got resolved ok.

Welcome to being a founding Xinja!!!

E

Eric Wilson posted on 13.01.2018

Replied to Heath Smith

How is Xinja different to other direct banks

Hi Xinja team,
Before investing in this offering there are a few concerns i would like to address.

1. How would Xinja differentiate itself from other direct banks such as Ubank, MeBank and ING direct? In the offer document there was a mention of a 'technology strategy' which would differentiate Xinja. However i dont see how these features isn't already been provided by existing banks or wont be copied by other banks
2. How would Xinja compete with them on cost? They have economies of scale and would be able to access funding at a favorable rate.

Warm regards,
Jacky

Jacky Chen posted on 13.01.2018

Hi Jacky,
 
Thanks for the insightful questions, economies of scale and sustainable competitive advantage should always be in your mind when considering an investment in almost anything.
 
I guess both your questions come down to a larger meta question; “Are neo-banks around the world going to be able to compete with the incumbents in their countries?”
 
Xinja is far from the first neo bank globally, with many countries around the world having neo banks including the UK, US, Europe, South Africa, China and a gazillion more. NB please don’t rely on the numerical value of “a gazillion” in your investment decision!
 
Now you should do your own research, but in my personal opinion most of these banks don’t compete on their technology strategy alone, or even primarily. 

Customer experience, brand value, ethics and fixing customer problems are often the reasons you hear customers saying they love these banks. 

There is no one technology feature or cool gimmick that is “going to win the war”. Mostly, because as you say they can be replicated.

However a couple of years on since the neo bank movement began in the UK and spread globally it appears that many of the neobanks are doing very well indeed. You shouldn't take my word for it though. Leap on Google and you can find some good research on neo banking and its successes and failures.
 
The other thing that might be worth mentioning is that a neo bank strategy is quite different from a legacy bank direct play. Often these businesses run off pretty old technology in the back end, sometimes with a pretty front end website glued on. You also need to look carefully at who owns them. UBank is wholly owned by NAB, MeBank is owned by the Industry Super funds and so on.

The technology of a fully fledged neo bank is end to end digital from the customer’s mobile to the back end banking platform. Remember its built for mobile. 

Plus in my experience the customer focus and customer experience strategy is very different for a neo bank.
 
In terms of Xinja competing on costs it is absolutely swings and roundabouts. In some areas they are probably going to get us. As you say, to start with cost of funds is probably going to be one of them.
 
In other areas though we may have an advantage, for example our operating costs may be lower due to no legacy systems, no branch networks, no mothership corporate costs to support. People may actually like us and tell their friends to download our app, lowering our cost of customer acquisition!

We have provided some financials in the offer document which you should take a good look through and form your own opinion on.
 
You might also want to have a look at the global neo bank market and see how neo banks around the world have differentiated themselves from their own incumbents and see if you are satisfied they have produced a suitable return and whether Xinja can do something similar here. As always though, it’s really important you do your own research and draw your own conclusions.
 
Best of luck and don’t hesitate to ask any further questions.

E

Eric Wilson posted on 13.01.2018

Replied to Jacky Chen

Unable to sell shares

Hi there, I just submitted a subscription to the Xinja offering and have decided to withdraw.

I made this decision after reading the CSF investment agreement. Under Investment Acknowledgement 2.1 section b under point iii (or3) stating "The investor confirms that it understands that is may never be able to sell the Investor Shares and that the value of it's investment in the company may be diluted over time".

I had invested with the idea to sell the shares after a number of years (assuming their value had increased in that time) and after speaking with online support with Equitise it seems that I cannot do this.

I must apologise for my misunderstanding of the concept of returns for the crowd funders. However I wasn't comfortable with the idea of buying the shares and not having the right to sell them, my understanding was if you buy a share then you own that share. I'm guessing that upon agreeing to the Investor Acknowledgement the right to ownership is somewhat waived.

However the shortcoming here is definitely my own in assuming that this is how it would be, I have no doubt that Xinja will be a massive success (hence why I jumped in so quickly), irrespective of my part taking in it or not. The concept and customer focus of it alone had me sitting by my email everyday awaiting the deal room for it to be opened.

Thank you and all success in the future.

Heath Smith posted on 12.01.2018

Hi Heath,

There seems to be some confusion here. Let me see if I can pick it apart.

Firstly, thank you for making an investment in Xinja, we really appreciate your trust and interest. Sorry you had to be concerned like this, that's not what we hoped for at all.

Right, lets get into it.

1. Xinja is selling shares in Xinja to investors.

2. Equitise is the platform we are required by the regulator to go through in order to crowdfund. They do not own Xinja shares at any point, and have no ability to restrict what is done with them once you own them. They manage the governance of the sale and provide a platform for it. No more.

I believe the clause you quoted is designed to set out that an investor can't hold Equitise accountable if Xinja doesn't succeed and investors can't sell their shares or get diluted.

3. Any shares you buy, once the purchase is complete at both ends, are yours and yours alone. Your understanding that if you buy a share, then you own that share is 100% correct.

4. As far as selling those shares goes, there may be some issues around liquidity ( see the post to Scott Lang at the bottom of the blog) as most start ups can face, but you absolutely own those shares and no document that you may have signed with Equitise will change that.

Perhaps if you are still worried it might be worth getting some independent legal advice, and just being doubly sure of your position?

If you would like to talk further about this, drop me your number to hello@xinja.com.au and I will give you a ring.

Sorry again you had to deal with this stress, and please dont be concerned as you do have a 5 day cool down period if you still decide to withdraw. We want you to be 100% comfortable with your investment.

E

Eric Wilson posted on 12.01.2018

Replied to Heath Smith

sounds exciting so how do i work for you..

Hi this sounds awesome - so how do i get on this exiting journey - money invested btw.
Second question :-) once this offer closes will we be able to trade shares on the ASX?
thx

Tim Gerber posted on 12.01.2018

Hi Tim,

Firstly thanks so much for investing, we will do our absolute best to build a business you can be proud of.

If you would like to work at Xinja, drop your CV to hello@xinja.com.au. We always look through that list for suitable experience before we go external.

Our shares wont be able to traded on the ASX as we are a public unlisted company. You might find my response to Scott Lang further down the blog useful as well.

Cheers

E

Eric Wilson posted on 12.01.2018

Replied to Tim Gerber

Getting a Bank Licence

Sharing a question from an Investor via Email:

"What happens if you don't get your license?"

Betsy Westcott posted on 12.01.2018

Thanks for putting this up on the forum Betsy, its an important risk to be aware of, and thank you to the OP.

I am assuming here that the OP meant our banking license (becoming an ADI). If anyone wants to know in regards to our AFSL or ACL just let me know.

We have deliberately designed our product roll out so that the product which becoming an ADI principally impacts, deposits, is our last to be implemented.

If we were delayed or not granted an ADI status at all, we would seek to continue to operate as a non bank lender, which in of itself can be a very profitable model....think Mortgage Choice or Aussie HomeLoans.

Its not our Plan A, but its a pretty good Plan B.

E

Eric Wilson posted on 12.01.2018

Replied to Betsy Westcott

Expected average growth per year in percentage

Based on business / investment model, do you have estimated average growth of the share per year?

Sureshkumar Muthusamy posted on 12.01.2018

Hi Sureshkumar,

Little more tricky this question. Due to the regulation surrounding crowd funding we have to be very circumspect about predicting numbers like this over extended periods of time.

I think probably the best thing to help you form an opinion is to examine the share price growth of similar businesses in other countries, and then adjust for any Australian factors you might think relevant to estimate our potential share price movement.

Companies you may want to compare us to might be Monzo, Atom, Starling, N26, Simple, Tandem, and anyone else you think might be comparable.

Sorry we cant be more specific and give you an $X over Y time answer but we would probably get into trouble for it. Google should be able to assist with some comparisons fairly quickly though.

E

Eric Wilson posted on 12.01.2018

Replied to Sureshkumar Muthusamy

Funding

Can you provide the estimated wholesale v retail (deposit) funding split over the next couple of years? And a sense of tenor/ liquidity risk involved? Thanks

David Thomas posted on 12.01.2018

Hi David,
To some degree this is controlled by APRA and the conditions of the RADI and how fast we move onto an ADI. Without diving into too much detail it is probably safe to assume that the majority of our funding split will be wholesale for the timeframe you have mentioned.
E

Eric Wilson posted on 12.01.2018

Replied to David Thomas

More details on the services and functionaliy

Hi Eric, Do you have any more details on the functionality, services and use cases that are available in the app?

Luke Beeton posted on 12.01.2018

Hi Luke,

At this point, no further information to publicly release beyond the website and the data in this data room.

We do however have walls at Xinja HQ covered in feature development pipelines, plus we will begin running our customer prototyping sessions again in a couple of months! You would be most welcome to join us at one and help us solve some real customer problems.

Thanks for taking the time to take a look at us.

E

Eric Wilson posted on 12.01.2018

Replied to Luke Beeton

Valuation

Eric et al,
Delighted that you have made it to the point of capital raising & delighted to be an investor!
As I've mentioned before Eric, I'm intrigued with the valuation put on the business, as it appears Ralph Shale is as well (see above).
Can you provide a bit more clarity or colour on this? (Greg)

Gregory Morris posted on 12.01.2018

Hi Greg,
Thanks so much for becoming an investor and all your support over the past couple of years. I really appreciate it, as do the other members of Xinja that know you.
I have responded to Ralph below but do come back if you have any further questions.
E

Eric Wilson posted on 12.01.2018

Replied to Gregory Morris

Investment by Technology Partner

Is your technology partner providing a cash investment or are shares being issue in lieu of fees?

Ralph Shale posted on 12.01.2018

Hi Ralph,

Easy question! The shares are being issued in lieu of fees for work already completed.

E

Eric Wilson posted on 12.01.2018

Replied to Ralph Shale

Valuation

I understand that the offer is made at the valuation of the $5m raised to date, but I would be interested in some references or evidence that this valuation is reasonable? Can you reference other transactions to support this valuation?

Ralph Shale posted on 12.01.2018

Hi Ralph,
Assessing the validity of a valuation is always hard for an investor, or indeed a business itself.
Some of the factors you should consider are the size of the market and the opportunity within it, the competence of the team, the technology being employed, the regulatory environment and the progress toward licensing.
As you mention you might also want to seek out other transactions of this nature that might be similar.
Obviously as we are the first equity crowd fund in Australia, and the first Australian company seeking to becoming a neo bank comparisons are rather limited!
Probably your best bet to judge our valuation would be to go and review the crowdfunding efforts and/or other capital raisings for similar overseas neo banks. Some possible companies to investigate might be Monzo, Atom, Starling or N26.
Cheers
E

Eric Wilson posted on 12.01.2018

Replied to Ralph Shale

ESIC

Hi Xinja Team,

I am super excited to be on board as an investor with Xinja. Honestly speaking I thought of the same idea (digital banking) early last year and was doing some investigation & learning into this startup myself but due to insufficient capital & restricted banking knowledge, I still would have needed another couple of years before making this a reality.

So, in that sense I am glad that Eric Wilson is already well underway with this concept & developing Xinja with a knowledgeable team. I couldn't help myself to get on board with your adventure and am hoping for the best result for all of us.

One question I do want to ask is, if Xinja qualify as ESIC? (Early Stage Innovation Company).

Regards
Milan

Milan Bawa posted on 12.01.2018

Hi Milan,

Thank you so much for investing in us, and for having the same idea! We are honoured that you would invest your hard earned.

As far as Xinja qualifying as an ESIC, it's really important that you seek your own appropriately qualified advice on this. Its not appropriate that you rely on our opinion if this is important to your investment decision. With that in mind, we believe it is likely that Xinja will qualify.

Cheers

E

Eric Wilson posted on 12.01.2018

Replied to Milan Bawa

What do the Intangible Assets consist of

Can you expand on the nature of the intangible assets of AUD1,234,247, and the associated cost of purchasing these assets, in the balance sheet and cash flow statement?

Damian Manchee posted on 12.01.2018

Hi Damian,

Thanks for reaching out and taking an interest.

The intangible assets amount in the balance sheet is the amount we have spent developing our technology (It's referred to in the audited accounts Appendix A as the 'software development fund').

Cheers

E

Eric Wilson posted on 12.01.2018

Replied to Damian Manchee

Name of the global software development company Xinja have partnered with

As per page 11 and 22 of the Offer Doc, Xinja have partnered with this company who invested in the Series B Funding round.in lieu of services rendered. The name of the company has not been disclosed.

Emmanuel Vergara posted on 11.01.2018

Hi Emmanuel,

The organisation's name is Equal Experts. They are a global software development firm headquartered in London and we work with their team in London, the US, and Canada.

https://www.equalexperts.com/

E

Eric Wilson posted on 11.01.2018

Replied to Emmanuel Vergara

Can Xinja outline in more detail the dilution risk faced by retail CSF shareholders

The offer documents contain few references to dilution and section 2.1 Acknowledgement of the investment agreement states the following: the value of [the Investor’s] investment in the Company may be diluted over time...

Does Xinja have any plans to dilute retail CFS Ordinary Shares in the future? Is the dilution risk faced by the Ordinary Shares class greater than the Founders Shares class (for example)?

Ashton Jones posted on 11.01.2018

Hi Ashton,

Thanks for the question. It's a really important point you bring out here.

Firstly, and most importantly, the shares on offer are exactly the same as the shares the Founders have and previous investors have. Everyone gets the same deal. No special privileges for early investors or founders at the expense of retail CSF investors. That is not the Xinja way.

If you get diluted, I get diluted, and the previous investors get diluted.

The only difference with the Founders shares class as opposed to previous investors and retail CSF shares is that should Xinja be liquidated, the Founders shares come behind all the other shares in terms of creditor priority for the first few years of operation. As you can see this puts the Founders in a worse position than previous investors, as it should be if we were to stuff up.

Will all our shares, including the retail CSF shares get diluted in the future? If we seek to raise more capital, which we almost certainly will, the answer is yes. That is common with all start ups and only becomes a cause for concern if the overall value of the business as a whole isn't growing to keep pace with the dilution.

The idea is that it is better to own the leg of an elephant rather than the whole of a mouse!

I hope that helps, please come back with further questions if I didnt explain anything well enough, and I promise no more animal analogies.

Cheers

E

Eric Wilson posted on 11.01.2018

Replied to Ashton Jones

How does Xinja plan to actually give money back to investors

I have read the offer documents carefully but apart from a mention of possible dividends how and when can investors expect to be able to exit their shareholdings in the firm is Xinja expecting to list on the ASX or elsewhere in future

Scott Lang posted on 11.01.2018

Thank you Scott, great question.
Firstly its important for us to be totally transparent and ensure everyone understands a start up business, by its nature is relatively illiquid in the short term. You should probably think of this as at least a twenty four to thirty six month investment.
That said, there could be a couple of ways investors may be able to exit their shareholdings.
The first as you say is by a potential IPO, which could occour late in Year two or Year three. This is a great way for a growing bank (assuming we get our license) to raise regulatory capital as well as provide investors with a chance to exit.
The second possibility is through a trade sale where another large organisation chooses to buy some or all of Xinja. Obviously at this stage we have no idea if this will happen or if the Board would assess the offer to be to the benefit of shareholders.
Finally we are investigating the possibility of establishing a secondary market for existing shareholders to sell and buy amongst themselves. We have to be careful not to fall foul of the legislation regulating exchanges, but we understand a secondary market would be desirable and we are investigating further to see if its possible.
I hope that helps.
Thanks very much for your interest and please dont hesitate to ask any further questions you might have.
All the best
E
Eric Wilson (CEO Xinja)

Eric Wilson posted on 11.01.2018

Replied to Scott Lang

  • > Offer Type : Australian Retail (CSF) Offer This offer is open to Retail and Wholesale/Sophisticated investors in Australia. Whilst in New Zealand the offer is open to Wholesale investors.
  • > Company : Xinja Holdings Limited Securities purchased are for direct equity in Xinja Holdings Limited.
  • > Security Type : Ordinary Shares
  • > Fees Paid by Issuer : 4% of funds raised Upon successful completion of this funding round a total of 4% of capital raised will be paid by the Issuer to Equitise.
  • > Cooling-Off Rights : 5 working days - Retail investors in Australia are able to withdraw their applications for securities with accordance to the Australian Crowd Source Funding (CSF) regulations. For more information please click on the link supplied.
    More Info
  • > Related Parties : None

More detailed information about this offer is contained in this Offer Document

Offer Document
Offer overview

 

The Company is offering 400,000 to 2,400,000 ordinary shares under the following terms:

Executive summary

 

WHAT IS A NEOBANK

The term neobank is synonymous with a purely digital bank. An app with a powerful set of banking functions that are designed to allow an individual to interact entirely through their smartphone.

INTRODUCING XINJA

Xinja is building what we hope will be Australia’s first, independent, 100% digital bank, designed from the ground up for mobile. Xinja is not a bank yet, but it is working closely with regulators to become one and we hope you will invest to help us build a bank we can all be proud of.

Our ability to offer banking services and call ourselves a bank, relies on us gaining a number of licences and approvals from regulators.

We are seeking to become a genuinely new independent bank, finally giving Australians a choice between traditional banks and a new, transparent, digital banking experience.

Xinja seeks to revolutionise our customers’ banking experience, not just making it quick, but also fun and helpful, allowing them to easily track their spending and save for what they want.

More importantly, we seek to help our customers effortlessly get ahead.

Xinja will be more than a mobile banking app because it aims to really help customers make the most out of their money. It will be more than a money management app because it's immediate, allowing actual banking and money management to be combined.

And more than both of these, because it will be intuitive, easy, instant and fun to use.

 

INVESTMENT HIGHLIGHTS

Business model

 

CORE BUSINESS MODEL

The business model of Xinja is in many ways similar to that of a traditional legacy bank with the exception that Xinja doesn’t have physical locations and branches. Xinja will make money by lending money to borrowers at a higher price (interest rate) than we pay to borrow it from depositors and other sources. The difference between the two rates is called the Net Interest Margin (NIM). This will be the principal source of revenue for Xinja.

 

HOW IS XINJA DIFFERENT TO LEGACY BANKS?

Unlike a legacy bank, apart from initial start up costs, Xinja is expected to have very low operating costs. Xinja will be delivered via our customer’s mobile phone. They will interact with us via chat and phone. As Xinja will have no physical locations and branch networks to support, we reduce our costs significantly.

Artificial Intelligence (AI)/Machine learning (ML) are modern technologies that utilise the power of computing to complete tasks and learn as humans do, which allows technology to be adaptive and provide insights such as a human would.

Our planned AI/ML at this stage, whilst basic to begin with, will increase in sophistication over time. Eventually we hope it will provide highly personalised financial tools that nudge our customers in the right directions. It is AI and ML that will make a high level of customer service scalable and affordable.

We also anticipate that Xinja will be well positioned for the arrival of open banking in Australia. Open banking is the ability for customers to direct that their data be sent to other financial institutions, allowing amongst other things rapid opening of accounts and transfer of credit or payment histories.

Xinja should be able to take advantage of this change both to help customers transfer their data wherever they wish, but also to receive such data and use it to create value both for us and our customers, through additional discounted services. Xinja embraces this power to consumers.

We are uniquely positioned to develop and adopt new innovative fintech solutions to create new banking services and customer experiences quickly and more cheaply than existing banks while operating within the Australian regulatory and compliance frameworks.

Milestones & History

 

KEY ACHIEVMENTS TO DATE

Xinja has achieved some key milestones ahead of our official launch:

Team: We have assembled a committed and exceptionally experienced team of customer experience, banking, marketing, and technology professionals to build and launch Xinja.

Product development: We have completed approximately 80% of the alpha version of our app for the prepaid debit card service, and the back end technology to connect to our card provider is well progressed. We are hoping to launch our Alpha product for internal staff to use and test shortly. The Beta product launch of our prepaid debit card is expected in February/March 2018.

Waitlist: We have thousands of Xinjas on our waitlist of pre-registered customers.

Community: We have started to develop a community of like-minded Xinjas. This community wants to see a change in banking, with ethics, customer service and great value for the customer leading the charge. We look forward to these Xinjas becoming our customers and our voice as we seek to change banking in Australia forever.

Brand: We have started to build our brand with multiple media profiles and stories across The Australian Financial Review, The Australian, The Sydney Morning Herald, The Canberra Times, The Brisbane Times, Bloomberg, Sky News Business, Channel 7, Channel 10 as well as multiple web news sites and blogs.

Series A Fundraise: We have successfully completed a Series A fundraise in May of 2017 for ~$2.8M from founders, High Net Worths (HNWs), and Family Offices. This has funded the build of our Beta Product the Prepaid Debit Card and helped to assemble our world class team.

Series B Fundraise: We have successfully raised $5M in our Series B fundraise in November 2017. At least half of this was raised from existing investors who liked what we were doing so much, they chose to reinvest.

Licence submissions: We have already submitted applications for an ACL (Australian Credit Licence), an AFSL (Australian Financial Services Licence) and to become a Restricted ADI (Authorised Deposit-taking Institution). We are well progressed in our consultation with ASIC and APRA, the two key government regulators from whom we need approval. There is of course, no guarantees licenses will be granted.

World-class technology: We have established a vital and valuable partnership with a global software development company who have also invested in the series B funding round. This allows us to have software teams working on Xinja around the world.

Strategy & Vision

 

BUSINESS STRATEGY

Our business strategy is built around our core purpose of helping Australians make more out of their money, and is designed to ensure we are highly competitive and viable. We see no conflict between these two objectives, in fact we regard them as highly complementary.

 

THE XINJA POINT OF DIFFERENCE

Our primary point of difference in the marketplace is that we are built in our customers’ interests. We believe it’s time Australia had access to the kind of banking that is available in other countries, that not only delivers all the benefits of being 100% digital and mobile, such as ease, speed and integration, but also uses the latest technology to help them get ahead by improving their everyday financial behaviour.

The Xinja experience differs from a typical banking experience in 4 key respects:

  • Working for you: At Xinja we are passionate about increasing money mindfulness and financial literacy, and this will become a by-product of using the app on an ongoing basis. The app is being designed to prompt users to better financial behaviour such as setting and sticking to targets, saving on an ongoing basis, ring-fencing particular funds without opening separate accounts, or moving their money around to pay minimum interest on their borrowings. Central to this is automation, so that the optimisation of our customers finances can take place with minimum effort from customers.
  • Easy as… & fun: We are building an entire retail bank for the mobile phone. This means setting up an account in seconds, zero/limited paperwork, tapping to pay a bill and saving with a single swipe. There will be friendly, fast support via chat, and overall it will be much simpler and easier for users to understand and interact with their money, so better, faster money decisions without the angst. Adding to that gamification and rewards, and managing money becomes less of a chore, and more fun. Xinja will gradually release new features to the Australian market.
  • A win-win: Striving for 100% digital and having modern technology lowers our costs, and these savings can be passed on to customers in the form of competitive rates and low or no fees. In addition to that, we are designing our products to help our customers get ahead and so that, if they do well, so do we.
  • Building a bank together: We are building a bank with our customers to address their needs and resolve their problems. To date we have talked to hundreds of Australians about what they find challenging in managing their finances and what they are looking for. Developing the app we’ve run ongoing usability sessions giving pre-registered customers a chance to see early versions and feedback on its design and features; these sessions will carry on after launch so that we can iterate the Beta release with customer input. We will continue to bring customers into all parts of the design process, to help us make decisions and shape our thinking.

 

PHASED PRODUCT RELEASE

Customer Acquisition

 

EARLY ADOPTERS

 

EXTENDING TO A BROADER MAINSTREAM

As a new category and brand, it is important that we provide reasons to engage with Xinja that would appeal to a more mainstream audience. This comes down to including competitive product messaging in our marketing, and we are ensuring our products are highly competitive and that there are strong reasons to adopt Xinja outside of any appreciation of the experience, our approach or the longer term benefits.

 

BRAND POSITIONING & MESSAGING

We are positioning Xinja as working in our customers’ interests. This will be evident in our communications, however the tactical messaging for customer acquisition will focus on key themes that are likely to attract attention i.e. new experience or product benefits. It is essential that all the initial acquisition activity will be categorised by a strong and consistent brand personality and visualisation, to help us build awareness and recognition in early phases.

 

CHANNEL STRATEGY

The channel strategy for Xinja employs both a direct and channel approach. Direct channels use outbound marketing to reach customers whilst a channel approach attracts customers through strategic partnerships and referrals. 

Market Overview

  

THE RISE OF NEOBANKS GLOBALLY

Over the past 3-5 years there has been a global wave of neobanks emerging in most developed financial services economies. This has been made possible by shifting legislative environments, and driven by the mass adoption of smartphones and by customer dissatisfaction with traditional banking institutions.

Retail banks are heavily regulated institutions that hold and provide access to everyday people’s money through bank accounts. For any change to have occurred in this landscape the first step is for regulatory bodies in that country’s jurisdiction to adapt legislation and allow a pathway for new entrants to enter the market. These changes have already materialised in the United Kingdom (UK), the United States of America (USA), across Europe and parts of Asia.

This innovation in retail banking is typified by Monzo in the UK. The regulatory body there has enacted laws that allow Monzo (and others like it) to hold everyday citizens’ money. The regulatory changes have introduced a phased approach to issuing banking licences, rather than the previous “all-or- nothing” approach which presented almost insurmountable barriers to entry. As a result the UK has seen an influx of financial technology entrants that are targeting the most profitable elements of consumer banking. The retail consumers in the UK have benefited greatly from these changes through increased price competition, with improvements including enhanced customer service, more powerful banking technology and lower foreign exchange costs. 

The following diagram depicts the rise of neobanks globally and the amount of capital they have raised to displace traditional banking models.

Risks Facing The Business

 

Below is a description of the main risks facing Xinja. Only the risks that may significantly impact the success or failure of the business have been included.

An investment in Xinja should be seen as high risk and speculative. A description of the main risks that may impact our business is below. Investors should read this section carefully before deciding to apply for shares under the Offer. There are also other, more general, risks associated with Xinja (for example, risks relating to general economic conditions or the inability to sell our shares).

A request from our Chief Executive Officer and Chief Risk Officer (to help us sleep at night), if you are in any doubt, if you are unsure, if you do not understand anything in this document and can’t get an answer, if you cannot afford to lose the investment amount, please, do not invest in this offer. We would much prefer you keep your hard earned money if investing in this offer may place you under financial stress.

Key Risks are within the areas of:

Competitive Landscape

 

THE RETAIL BANKING LANDSCAPE IN AUSTRALIA


Retail banking, often referred to as consumer banking, is mass-market banking that offers services such as transaction and savings accounts, term deposits, personal loans, mortgages, debit and credit cards.

Whilst the neobank model offers a strong value proposition to customers by achieving a high degree of personalisation and automation in banking technology.

The retail banking market in Australia has remained largely stagnant due to regulatory barriers to entry. As a result the incumbent banks have boasted some of highest returns on equity across the globe, in a mass market exceeding $1 trillion Australian dollars in value.

 

Use of funds

 

Alongside this raise, we have just closed a round for $5m on the same valuation that the crowdfunding investors are investing on.

Money in this raise from the crowd funding will be used to:

  1. Acquire and integrate back office digital banking technology to deliver lending and deposit products to market.
  2. Continue to develop our front end app, AI and data analysis capabilities.

Below is a complete breakdown of Xinja’s intended use of crowd sourced funds over the next year:

 

Financial summary

 

The following financials are presented on a consolidated basis. The entities are Get Kite IP Holdings Pty Ltd, Get Kite Services Pty Ltd, Get Kite Pty Ltd, Get Kite Holdings Pty Ltd and Xinja Holdings Limited:

Please note the 2017 figures are management accounts as of 31/12/2017.

All figures are in AUD unless otherwise stated.

*The dates in the Profit and Loss section have been updated as at 31/12/2017 to reflect the dates in the Offer Document.

Press Coverage

As seen in...

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Appendix A Part 1 - Audited Financial Statements

These are the audited financial statements as of 31st of October for Xinja Holdings Limited (formerly know as Get Kite Holdings 2 Pty Limited).

Download

Appendix A Part 2 - Independent Auditor's Report

This is the Independent Auditor's Review Report for Xinja Holdings Limited (formerly known as Get Kite Holdings 2).

Download

Offer Document - Xinja Holdings Limited

This is the Offer Document for Xinja Holdings Limited. *This document has been updated as at 18/01/2018.

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