Australia's first fully-licenced neobank Volt is to shut down - giving customers barely a week to withdraw their deposits - after failing to pick up sufficient funding to support the business as a going concern.
Volt Bank is one four Australian neobanks approved by the Government with a view to increasing competition in the retail banking market. Xinja Bank threw in the towel in December 2020, while 86400 was flogged off to National Australia Bank. Of the four just Judo Bank remains.
The shift to digital caused by the global Covd pandemic forced the incumbent banks to up their game, nullifying the online edge of the new market entrants. At the same time, rising interest rates have made borrrowing more expensive amid a VC flight from loss-making fintechs that has hit market valuations across the sector.
A year ago, Volt raised A$85 million, with mortgage broker Australian Finance Group (AFG) (AFG.AX) paying A$15 million for an 8% stake. Volt returned to the market this February with hopes of raising another A$200 million but failed to find many takers, a person with knowledge of the plans told Reuters.
"We have considered all options but ultimately we have made this call in the best interest of our customers," Volt founder and CEO Steve Weston says."The entire Volt team is deeply disappointed to have reached this point."
The company had A$113 million ($78 million) in deposits and A$80 million of home loans as of April.
Customers have been told that they need to withdraw their funds from their Volt bank accounts before the 5th of July 2022
"It is recommended that all customers stop using their accounts immediately," says the company. "Volt will start closing accounts from the 5th of July 2022 so please ensure you have withdrawn all your funds to leave a balance of $0 in all accounts before then.
"Volt is doing everything possible to return the deposits in an orderly and timely manner. The Australian Prudential Regulation Authority (APRA) is closely monitoring this process. In addition to this, deposits are protected under the Australian Government Financial Claims Scheme which guarantees deposits up to $250,000 per account holder."