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The ACCC wants to interrogate the big banks in another tough inquiry – but it's Afterpay and Xinja that it's coming for first

Jack Derwin
  • The Australian Consumer Competition Commission (ACCC) is considering launching its own inquiry into Australia's banking sector and newly surfaced internal documents obtained by the Nine newspapers have revealed the companies it wants to involve first.
  • Neobank Xinja and challenger bank ING are listed as the ACCC's "highest priority" targets to hear from in preliminary discussions on how to make banks more competitive.
  • Buy now, pay later companies Afterpay and ZipCo are also listed, alongside ME Bank and CitiGroup.
  • It's unclear however if the inquiry will proceed, with the ACCC indicating it's concerned that the government won't back it.

Just six months after a royal commission took the big banks to task in a very public way, the Australian Consumer Competition Competition (ACCC) wants to take a swing at them.

However, on Friday it emerged that the first entities up for interrogation in the so-called 'banking inquiry' aren't big banks at all – but their newest competitors.

"Board minutes for the September meeting and agenda items for Friday's meeting reveal the ACCC's vision for the inquiry would include meetings with new financial digital upstarts such as Afterpay and neobank Xinja," the Sydney Morning Herald (SMH) reported, with the Nine newspapers having exclusively obtained ACCC internal documents.

The competition watchdog's "highest priority", according to its October meeting agenda, is to speak with Xinja – one of Australia's newly arrived neobanks – and ING, a second-tier traditional bank as well as the Customer Owned Banking Association. It's understood that these interviews would be used to consult on their views on competition in the banking sector.

"We intend to conduct these meetings in lieu of issuing an initial set of notices," according to the agenda.

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ING will no doubt have plenty to say. It notably did a roaring trade in the aftermath of the last royal commission, signing up 234,000 new customers in Australia – an increase of 57%. Xinja is looking to emulate its success with a wholly digital offering.

Ironically, ING has previously written neobanks' chances off.

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Meanwhile, Xinja competitors Volt and 86 400 are listed as other "potential targets" as are buy now, pay later Afterpay and ZipCo. They're joined on the list by ME Bank -- owned by Australia's industry super funds -- and Citgroup, the US financial company that owns CitiBank.

86 400's owner, UK payment service Cuscal, is also mentioned, as are home lenders Tic:Toc, La Trobe Financial and Pepper group.

The question for the enquiry, however, remains whether it will even get off the ground. The new documents shine a light on the ACCC's reluctance to continue without formal government support, something the current federal government has signalled it's unlikely to give.

"There may be a perception that we are commencing the inquiry before the Treasurer has formed a view on whether it should proceed," the ACCC documents said.

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Banking incumbents are also likely to mount firm resistance to another campaign into it less than a year after the last sent it reeling, including ending the career of NAB CEO Andrew Thorburn altogether. If the preliminary conversations go forward with the likes of Xinja and ING, however, the ACCC will no doubt receive ample encouragement as well.

At this stage, it looks like it could go either way.