Fitness star and Young Rich Lister Emily Skye may have built a small fortune but that doesn’t mean she’s good with money.
“I’ve never really known what’s going on with money, I mean I love to spend it but I’m not able to track it and really be responsible for it,” Ms Skye said.
Ms Skye rockets up the 2018 Financial Review Young Rich List with an estimated worth of $36 million, reflecting growth in her online fitness business that attracted an undisclosed investment from Quadrant Private Equity this year.
As she continues to build the fitness business, including releasing the first app for her FIT program this year, Ms Skye is turning her attention to building investments outside the fitness industry. It’s because she wants to better track her spending that she’s made the first investment in a start-up that isn’t her own.
She’s backing a new “neo” bank, a fintech called Archa founded by former corporate M&A lawyer Oliver Kidd, that wants to offer products to their fellow Millennials. It’s joining a rush of fintech companies hoping to gain banking licences and take on the big boys.
“When I’m out with my friends they say, ‘I wish there was something, like an app where I can track [finances]’, and I say funnily enough something is coming,” Ms Skye said from the Gold Coast where she is based.
She’s tipping cash into a sector that is generating big returns for plenty of her cohort.
One of the big trends of this year’s Financial Review Young Rich list, published inside The Australian Financial Review Magazine on Friday, is finance and fintech. About a third of debutants are playing in those sectors. They include the founders of small business online lender Prospa, Greg Moshal and Beau Bertoli with estimated fortunes of $101 million and $45 million.
And despite the recent fall in Afterpay shares the stock’s stellar run over the past year – it’s up more than 130 per cent – has put swelled the fortune of its co-founder Nick Molnar, cementing his place on the Young Rich List with wealth of $341 million. Larry Diamond, co-founder of Zip Co, is also on the list with an estimated wealth of $64 million.
Melbourne-based Archa is joining the rush to steal market share from the big banks. After securing seed investment from Ms Skye and Australian rugby union player Quade Cooper, it’s now seeking $7 million from venture capitalists to help it launch a deposit product over the summer and progress its ADI licence.
But forget about mortgages. Mr Kidd argues Millennials want products for their lifestyle and home ownership isn’t on the agenda.
“We just don’t think our [potential] customers are interested in that kind of debt,” Mr Kidd said. “I think a lot of people talk about whether mortgages and whether houses are affordable but I don’t think enough people are talking about whether getting a house is desirable for younger people.”
Instead it plans to roll out a pre-pay debit card. It is advertising features like “social invoicing”, which allows users to invoice their friends when they pay a bill, even if their friends don’t bank with Archa.
Square Peg’s Paul Bassat queries the rise of so-called neo banks, arguing their capital requirements will be large, and this disadvantage will outweigh any cost benefits their models deliver.
“The folks that are going down the ADI route of becoming deposit-taking institutions and getting licences and going down that path, it’s a very, very capital-heavy approach,” he said.
Mr Kidd sees things differently. Regulatory change is throwing opportunity he feels Archa can profit from. “We are building something that is lifestyle-based. We are not trying to re-dress a bank in prettier clothes. We want to completely redo the products through a mobile platform.”