Airwallex targets big banks’ term deposit customers with new Yield product

Airwallex has seen an opening in the savings market, unleashing its popular Yield product that allows people to freely access funds without being tied to a term deposit.

Airwallex co-founder and CEO Jack Zhang overseas a financial empire worth more than $8.2bn. Picture: Gazi Photography

Airwallex is intensifying its battle with the big banks, unleashing its popular Yield product that allows people to freely access funds without being tied to term deposit lockup periods.

The Australian fintech has slashed the minimum threshold to access Yield from $500,000 to $10,000 after a successful launch to business customers and receiving approval from the Australian Securities and Investments Commission. This has allowed it to target retail customers.

Airwallex launched Yield eight months ago in an effort to smooth one of the biggest friction points for any business: the inability to earn a return on funds held in other currencies. It is now hoping to target customers who are fed up with lockup periods on term deposit accounts.

The company has so far attracted more than $100m in funds under management from business customers, which global head of product Shannon Scott said exceeded expectations.

Airwallex global head of product Shannon Scott.

“We’ve seen a lot of new business, not just the customers that were working with us already, which is fantastic,” Mr Scott said. “We expect that rate of growth to continue.”

Mr Scott said Yield – which the company has partnered with JPMorgan to deliver – was created largely from “apathy” from the big banks. Customers could move funds between cash and Yield accounts, unlike term deposits.

“Given that we work with so many different banking partners around the world, it’s quite easy for us. The traditional domestic banks … they’re less willing to or less agile in establishing those partnerships,” Mr Scott said.

Yield’s underlying fund, JPMorgan Liquidity Fund, offers a daily 3.67 per cent return on Australian dollar balances and 3.95 per cent on US dollar balances. This compares to the big banks offering an average of 1.06 per cent and 0.50 per cent (US dollar balances) for business saver accounts.

The ability to get a return on funds held in overseas currencies has been a problem for start-ups – which often raise cash from investors in US dollars – or businesses that have overseas customers who pay invoices in local currency. Mr Scott said businesses also benefited by having a more centralised platform.

“Obviously the actual return is the most significant. But also (removing) the administration overhead. Being able to have it in the same place effectively eliminates all that administrative hurdle, and I see that as very valuable.”

Airwallex was co-founded in Melbourne by Jack Zhang and three of his university friends. It was the fastest Australian start-up to reach a $1bn valuation and in 2021 joined Canva to as one of Australia’s richest start-ups.

It was valued at $US5.6bn ($8.27bn) in a funding round in late 2022, when it sought $US100m in financing, taking its total raised to $US900m from investors Square Peg, Salesforce Ventures, Sequoia Capital China, Lone Pine Capital, Hermitage Capital, 1835i Ventures and Tencent, as well as Hostplus and a North American pension fund.

Originally published as Airwallex targets big banks’ term deposit customers with new Yield product