The Inner Loop | n. 112
Superhero Trading App / Analysis: NAB's + CBA Interest Free Credit Card / Interesting Maps
This week, I’ve packed the usual Fintech goodness in, including analysis on the new NAB / CBA interest free credit card, while also having a crack at a teardown of a new Product ‘Superhero’ - an ASX share and ETF investing app tailored to millennials. Otherwise, rip in:
Australian Fintech and Startups
New Zealand BNPL ‘ LayBuy’ listed on the ASX and had a great debut. Link
CBA’s boss, Matt Comyn, told the parliamentary committee that Afterpay ‘looks a lot like credit to me’. Interesting flex, given CBA’s investment into Klarna. Link
Neobank ‘86 400’ is officially one year old. They had a nice announcement with some stats on the usage of the app. Interestingly (and maybe unsurprisingly) the top 5 recurring bills for their customers are Spotify, Netflix, Stan, Optus and Telstra (coincidentally, the exact five recurring bills I have). Link
Analysis: NAB and CBA’s 0% Credit Cards
NAB and CBA released 0% interest credit cards this week, named ‘StraightUp’ and ‘Neo’ respectively. Both occurred within one day of each other (interesting in itself). Each card offers a line of credit of 1k, 2k or 3k - charging a monthly subscription fee of $10 and upwards (instead of interest), depending on the credit limit. However, if your balance is $0 at the end of the month, you don’t pay the fee. Overall, this does work out to be cheaper than the interest you’d pay on a low rate card (~9-10% p.a.), but only by a nudge.
I have a few quirks with the aforementioned products:
If you run into hardship, the monthly fee will accrue indefinitely, meaning not proactively trying to pay it off and leaving your balance at say, $1000, means that you’re not encouraged to reduce your debt. BNPL providers offer a time frame (e.g. four fornightly instalments) to encourage you to reduce your debt. Zip and Afterpay will also encourage good behaviour by increasing the line of credit extended to you. The 0% card provides no real incentive, which could motivate people to get the card, max it, and then just pay off the subscription fee indefinitely.
If I have $1 outstanding at the end of the month, I still have to pay a monthly fee.
If I were to pay off a low rate credit card at the end of each month instead, would I not use that instead to avoid accruing interest? (feels like a slight cannibalisation of their product suite) - especially if there’s no annual fee attached.
Millennials have proven that credit cards are not a solution they want - so this feels a bit like a wolf in sheeps clothing. It’s still a credit card. It still requires 5-7 business days to mail once the application is complete (which is a big motivation for people to use BNPL - instant approval). As a product, it still has relatively complex terms and conditions (e.g. a tiered pricing and repayment model). Although you get no charges for late fees, I assume this will still appear on your credit report, which, as I mentioned, doesn’t encourage good debt management.
Overall, I can understand why the Banks want to try and capture a new market segment. I also think ANZ and Westpac are going to follow suit. But no matter how many times you try to look at a credit card from different angles, it is still a credit card. Unfortunately, I think this Product launch will generate 0 interest.
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Teardown: Superhero’s ASX Trading App
This week a new product ‘Superhero’ hit the headlines. The app is an ASX trading platform that allows people to buy and sell Aussie shares and ETFs for as little as $5 brokerage, with a minimum $100 deposit to start you off. Have a geez at the UI:
A product like this has been long awaited for Australians who are keen to rip into the stock market, but may or may not know how. Individual ASX stock picking has been left to the incumbents, given the high barriers to entry in the market, regulatory risks and difficulty in monetisation (to be fair, I don’t know how Superhero will make money aside from the brokerage fees, but I’ll stick to the Product analysis for now). Incumbents such as CommSec, CMC, Westpac Share Trading (the list goes on) have been the gatekeepers for any form of equity investing, while companies like Selfwealth are designed to be cheap and way more user friendly. So overall, it’s incredibly refreshing and exciting to see a product like this launch.
In terms of similar products, Robinhood left Australians hanging for a while, but it turned out their business model wasn’t viable down under. Then we had the advent of Raiz, CBA’s Pocket and even BT Invest, but these are more portfolio based (essentially select an ETF based off of your risk appetite).
In the domestic Fintech market, Superhero would be compared to something like Stake (which provides exposure to US equities), or Xinja’s upcoming stock trading platform (which is not yet live).
Big Tech
Google’s Finance product received a massive facelift (it looks, really, really nice). Link
Slack’s earning report this week wasn’t enough to please investors, with the announcement of 49% increase in revenue YoY resulting in the stock tanking. Link
IPOs
Cloud data platform, Snowflake, is going to IPO... Link
…So is cloud logging and monitoring company, SumoLogic. Link
Potpourri
Sacha Baron Cohen announced that Borat 2 has been completed and screened. Very nice! Link
Some interesting maps:
The Cretacious period seashore v.s. how people voted in the 2016 election in Alabama. Link
The size of Australia compared to Western Europe. Link
Melbourne is closer to Antarctica than it is to Darwin. Link
Trivia
(a) The flag of the United States has 13 red & white stripes. What colour stripe is at both the top & the bottom of the flag?
(b) How did these Game of Thrones characters die? Did Joffrey Baratheon die by panther or poison? Did Renly Baratheon die by mace or magic? Did Tywin Lannister die by arrow or axe? Did Ned Stark die by spear or sword?
(c) What everyday object has the following parts? Bead, belts, block, carcass, ribs, shoulder, sidewall, and tread. (Many of you will own more than one.)
(d) The name of what dish literally means “stem beans” in Japanese?
Jimmy’s Notes
Thank you to everyone for the feedback on the new format - seems like it has gone down well and I’m loving using the tool! I’d also like to link back two other newsletters you may be interested in:
Dexter Cousins’ ‘Fintech Chatter’ - awesome commentary on what’s going on in Fintech from an expert in the field. Link
Alan Tsen’s ‘Fintech Radar’ - awesome teardowns and analysis from another expert in the field. Link
Have a fantastic weekend!
Trivia Answers
***
(a) Red and Red
(b) Joffrey - poison
Renly - dark magic
Tywin - arrow
Ned - sword
(c) A car tyre.
(d) Edamame.
The Inner Loop | n. 112
Thanks for the shout out Jimmy. The Substack Mafia!