Australian neobank Xinja has pulled the plug on its banking operations, blaming a tough capital raising environment in the midst of the global coronavirus pandemic.
Launched in May 2017, Xinja was the first independent Australian neobank with products in the market: bank accounts, its high interest savings account ‘Stash’ and the recently added share trading account Dabble.
But with auditors last month warning that the firm's survival as a going concern was "highly dependent" on raising fresh capital, the company has decided to shut up shop, handing back its authorised deposit taking licence and closing all bank accounts with effect from 23 December.
A proposed A$433 million by Emirates’ World Investments in March failed to come good as the Covid-19 pandemic took hold and the bank stuttered.
In a statement on its Website, the firm says: “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. We hope to refocus the business in other areas such as our US share trading product, Dabble, should circumstances allow.”
Under the terms of the product, Xinja is giving its customers the required 7-day notice before closing the Stash Account and will be encouraging them to transfer any funds out of bank accounts as soon as possible. The company says the Xinja App and support teams will be available to help customers make the transition.
Customers are already experiencing trouble with the product however, with debit cards being rejected at the POS and online.
"We are receiving reports that Xinja debit cards and apple pay and google pay facilities are no longer being accepted," states the firm. "We are in conversation with Mastercard about this and will let customers know as soon as we have an update. Meanwhile, there is no problem with your transferring funds out of your accounts via the Xinja app or making direct payments from the app."