Payments fintech Novatti [ASX:NOV] has been granted a Restricted Authorised Deposit-Taking Institution (RADI) licence by the Australian Prudential Regulation Authority (APRA).
The licence kickstarts NOV’s launch of its banking business, to be called the International Bank of Australia.
NOV shares soared on the news. Novatti shares were up more than 40% late on Monday.
Despite the spike, NOV shares are still down 40% over the past 12 months.
Source: Trading View
Novatti receives restricted banking licence, launches new banking business
Novatti — the payments processor — has expanded into banking.
On Monday, the fintech announced that APRA had granted it a RADI licence.
Managing Director Peter Cook said:
‘We see banking services as significant across card issuing, merchant acquiring, billing and cross-border payments as it underpins the infrastructure and capability to Novatti’s core payments business while also giving us the ability to increase margins. The delivery of this licence, and now the launch of International Bank of Australia, has therefore formed a core part of Novatti’s growth strategy for so long. In addition, the bank has the strong advantage of being able to leverage Novatti’s existing payments ecosystem and global footprint to help win customers quickly.’
CEO of International Bank of Australia Guy Carvalho said the new bank sees an opportunity to cater to the ‘underserved migrant sector’.
‘In addition, we see huge potential in the significantly underserved migrant sector. The bank will have the advantage of being able to leverage Novatti’s existing payments ecosystem and global operating base to reach potential customers overseas and enable them to set-up bank accounts and transact before they even set foot in Australia. This is an incredibly unique service which will provide significant value to potential customers who want to get their lives sorted before reaching Australia.’
Source: Novatti
Novatti noted that its restricted licence runs for two years with the expectation that the business either progresses to a full licence or exits the banking business entirely.
Other exciting fintech stocks to watch in 2023
2022 has been tough for the fintech sector, but the big news from Novatti today highlights there is still life in the sector yet.
Fintechs can still provide valuable opportunities — at the right price and with the right growth prospects.
There’s no doubt that in recent years many fintechs suffered from overconfidence in the ‘growth-at-all-costs’ business model that caught them off-guard when the markets turned.
Australian BNPL fintechs fell victim to this approach.
Clearly, profitability is back as a priority for the sector.
With the right choices, some fintechs can grow into very sturdy, lucrative businesses.
Our market expert, Ryan Clarkson-Ledward, has done the necessary research required for discerning these.
He’s discovered three profitable fintech stocks flying under the radar. One of them, he says, is a start-up ‘wrestling with the big banks — and winning’.
Download Ryan’s free research report on three exciting fintechs here.
Regards,
Kiryll Prakapenka,
For Money Morning
