National Australia Bank (NAB) has agreed to buy out 86 400 for approximately AU$220 million, and combine it will its own digital-only bank, UBank.
NAB already holds a minority stake of approximately 18.3% shareholding in 86 400.
The bank said discussions about the acquisition with 86 400 started in late 2020. It follows plans NAB announced last April to lift Ubank's digital experience. This was reiterated again when it reported its 2020 financial year results.
"Our priorities over the next three to five years include simplifying processes and policies for home and business lending, creating simpler transactional banking, providing enhanced data and analytics to customers, and colleagues and growing our digital bank UBank," NAB said at the time.
"We will also continue to enhance our technology resilience via insourcing and migration of IT applications to lower cost, more reliable cloud platforms."
NAB outlined that once the acquisition is complete, it would combine UBank's customer base, brand, and staff with 86 400's team and technology platform.
"Bringing together UBank and 86 400 is consistent with NAB's long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace," NAB COO Les Matheson said.
"The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers."
"Over the past 18 months, we've challenged the status quo of banking through innovative products, services and technology. 86 400 and its customers will benefit from NAB's capital and balance sheet strength and investment spend to support accelerated growth and continued innovation, helping even more Australians take control of their money," 86 400 CEO Robert Bell said.
Still subject to regulatory approval, the acquisition is expected to be completed by mid-calendar year 2021. In the meantime, 86 400 and UBank will continue to operate as separate businesses.
"After a year marked by COVID-19 and an increasingly difficult capital-raising environment, and following a review of the market in Australia, Xinja has decided to withdraw the bank account and Stash (savings) account and cease being a bank. This was an incredibly hard decision," Xinja said a statement.
Xinja instead said it plans to "refocus the business in other areas such as our US share trading product, Dabble, should circumstances allow".