Why fintech Up is the coolest, most innovative bank in Australia

This week digital bank Up launched an Australian-first financial product aimed at helping young Aussies improve their financial wellbeing.

It’s the latest product from a fintech rapidly disrupting the financial sector with an innovative approach and winning gen Z and millennial customers from the big banks at a rapid rate.

Informed by a huge survey of 54,161 gen Z and Y respondents aged 18 to 34, Up bank’s new Hi-Fi product aims to help young Australians reach their financial goals.

The survey revealed that almost half of young Aussies struggle to save, and one in six don’t have any emergency funds. It showed that typically, and perhaps unsurprisingly – I was young once – gen Z and millennials are overspending on the “good life”, including going out partying and shopping for cool kicks, preventing them from saving for a mortgage deposit. Or even a rainy day.

Apparently, the rising cost of living is the biggest blocker (39%) for millennials, gen X, and boomers when it comes to reaching their financial goals.

Speaking to SmartCompany, Up’s chief product officer Anson Parker said: “With homeownership feeling out of reach for many young Aussies, there may have been a shift in focus. Young people might be putting their savings towards making memories and experiences in order to enrich their lives. Upsiders are setting up saving goals for everything from travel to eating out or putting their money towards a big life experience”.

To help them deliver on these goals, Parker’s team developed Hi-Fi.

“At its core, Hi–Fi has been designed to make money easy,” said Parker. “It’s an Australian banking first – and it will allow Aussies to cruise between paydays, take care of their bills, and hit their budgeting goals with ease.”

“Equally as important, it will allow them to comfortably know how much they’re due to have left over at the end of each payday so they can spend (responsibly) on the good life.”

750,000 customers, 120 employees

Australia’s first mobile-only digital bank, Up is designed, developed, and delivered by Melbourne-based fintech Ferocia, which was acquired by Bendigo Bank in 2021 in a $116 million deal.

Effectively a standalone SME developing a really cool product, Bendigo provided the app’s banking services from Up’s 2018 launch and eventually liked what it saw so much it decided it had to add it to its family.

The partnership began back in 2012 when Ferocia founders Dom Pym and Grant Thomas began working with the bank as a vendor for its Bendigo e-banking app and internet banking platform.

The highest-rating banking app in Australia, Up now has over 750,000 customers. According to Parker, these include 10% of 18-24 year olds and 7% of 25-34 year olds.

“We are growing pretty well,” he said. “There are six million 18-24 year olds in Australia, and we think they should all be on Up! Ultimately we want to be the biggest bank in Australia.”

Built with the DNA of a startup, even today Up only has 120 staff: a very high customer-to-revenue ratio. Those 120 staff would make Up one of those businesses that put the M in SME: the medium-sized employers with 50-200 staff.

The chief product officer has been with Up since the business was founded in 2018. Through a design and technology-led approach to banking, his team aims to reconnect people with their finances, putting financial wellbeing right at the heart of the app experience.

“Being non-bankers, coming from the software industry, we thought “why isn’t this better?”

The banking industry felt a long way behind compared to the creativity of the app-building ecosystem.

But rather than building a fully-fledged bank, Up entered the market with a different model, partnering with Bendigo from the beginning to access banking services.

This partnership allowed Up’s founding team to focus on building great software.

Innovation superpower

“We just focused on software and experience,” says Parker. “We moved quickly, didn’t burn our through cash, and maintained an outsider’s perspective.”

“Our superpower is that we can build stuff really quickly, stably and securely. It’s cheap for us to try new ideas, and we believe that innovation is our point of difference. We can’t outspend the big banks, but we can deliver great experiences. Our philosophy is ‘let’s build it and ship it’ and let customers be the judge”

And the ideas and innovation are good. Full disclosure, I am an Up customer, and over decades of banking with established banks in the UK and Australia I have never enjoyed my banking more: it makes banking fun.

Other innovations include 2Up, which reimagines couples banking (aka how joint accounts should work), the Save Up 1000 (a gamified challenge to help Australians save their first $1,000), Maybuy (a savings-based alternative to Buy Now Pay Later), and The Home Zone (instant conditional pre-approval for a home loan through Up).

And if for some reason you want an actual credit card versus paying for stuff via your phone, Up will send you one made of recycled ocean plastic (made in partnership with Seabin).

All this innovation comes from the founding team’s outsider perspective: “We looked at first principles of banking and thought ‘how can we do this differently?’” recalls Parker. And so Hi-Fi is designed to do banking conversationally.

“Hi-Fi is saying that instead of simply providing tools, maybe banks could provide money systems designed to help people manage their money better: doing more [within the banking app] than just giving people a link to a website.”

Entirely mobile versus mobile-first, look up Up on the Apple App Store and you will find the bank has a 4.9 rating, with more than 35,000 reviews. That’s unprecedented.

“We have amazing testimonials,” says Parker. “80% of our growth is word-of-mouth. It’s pretty amazing when most of the big banks have a negative net promoter score.”

Free coffees

That’s down to innovations such as Perk-Up which supplies Up customers with random acts of free coffee on weekdays between 7-11am. As a beneficiary of this generosity, I can report that it really works. When was the last time your bank bought you a coffee? That’s the kind of thing mates do. Which is the point.

“Our customers are backing us, they’re trusting us with their money,” says Parker.

“We want to pay attention to them, and make them feel as part of the tribe: Perk-Up is an amazing flex, you get a notification. It can be hard to explain why Up is great, bit it is really great.”

He’s biased of course – and so am I – but it’s hard to disagree.

Here’s one more example. Where are your savings held? What is your bank doing with them? I left my big bank because it was continuing to invest in fossil fuel extraction, despite greenwashing claims that it wasn’t.

When money is held in Up’s unique Savers, it’s helping finance community-owned, renewable energy projects like Hepburn Hydro and solar panels in schools – not fossil fuel projects or coal seam gas. Isn’t that what every bank should be doing?