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While other neobanks are 'racing for deposits', Up Bank has secretly been building something bigger

Jack Derwin

For a flashy digital bank, Up has been oddly quiet since it launched nearly 18 months ago.

While other neobanks have been quick to trumpet their quick deposit growth, Up has been going about its business with a modesty atypical of an ambitious startup.

"I see a lot of reporting on what these other neobanks are going to do. This castle in the sky stuff, but we're actually just going to do it," Dom Pym told Business Insider Australia on the sidelines of Pausefest in Melbourne.

"While all these other neobanks are racing for deposits, we're not. We already have heaps and they're growing."

To be fair, the main reason why Up's deposit book hasn't been included alongside the likes of Xinja, 86 400, and Volt is because it can't actually give those figures out. Operating on the same banking licence as Bendigo Bank – a fact which some neobanks claim negates Up's status as a true challenger – means those public figures are folded in with Bendigo's.

Pym, however, insists he wants to be more transparent, because he says Up, with a steady head start and without the funding requirements of its rivals, has amassed some serious business.

"We're signing up between 500 and 1000 new customers a day making us the second fastest-growing bank in Australia, just behind CommBank," Pym said, also noting Up has the highest-rated banking app in the country. In a rare indication of Up's growth, Thursday, Pym revealed on Thursday the bank now has more than 185,000 customers -- a number that far exceeds its much younger digital competitors.

"Others might say they're building a bank for customers by giving them what they want. That's bullshit. Customers don't know what they want, because they're only getting what they get from the existing banks," he said.

"Yes, we listen to our customers but you also have to provide stuff the customer doesn't even know there was."

While it might sound like spruiking, Up says it can back it up with examples. In less than two years, the challenger bank has an impressive list of 'firsts' to its name, including becoming the first retail bank to be hosted on the cloud, the first mobile-only bank in Australia and the first to offer Apple Pay, Google Pay and Samsung Pay via its app.

However, Pym shirks back from the title bank – perhaps for good reason, considering the recent financial royal commission.

"We're a tech company building a bank. I'm not a banker."

He cut his teeth in banking when his software company, Ferocia, began working with Bendigo Bank eight years ago. When his team decided it wanted to build its own digital-only bank, Bendigo offered its own licence for them to operate on. It's certainly a beneficial decision, allowing Bendigo Bank to lend out Up's deposits and earn a tidy margin. With 86 400 the only other digital bank to have delved into home lending so far, it makes Up not only the biggest digital bank but – with its customer base – presumably the most profitable.

While some aspersions have been cast on Up's relationship with Bendigo, its founder asserts its independence.

"Up is a collaboration. It's like a partnership, a joint venture type thing between Ferocia and Bendigo," he said.

Take its recent partnership with Transferwise, which gave Up customers access to dirt-cheap foreign exchange within their own banking app. Given the billions of dollars Australia's big banks – including fifth-placed Bendigo – make from FX fees every year, it's clear the decision was made by Up independently.

It's one of many partnerships Up has and planned to make. It has already brought Afterpay into the fold, not because it necessarily endorses the buy now, pay later company, but simply because Australians should be able to manage their repayments better.

"My view is that there are 5 million people using Afterpay every day in Australia, so how do I actually help them? How do we help them with financial literacy? How do we help them pay back their purchases on time? We can make it easier for them all via our own banking app."

While Up may have more than 12 months heads tart, the other digital banks will now be looking to cut into its lead.