While neobanks are sprouting up across North and Southeast Asia, one of Australia’s online-only banking pioneers is set to return its banking licence.
Citing a failure to raise funding from investors, Volt says it is closing its deposit-taking business and will return the funds to account holders as soon as possible.
“Following the pandemic and the current challenging global economic climate, we were unable to secure the funding needed to continue,” the neobank says in a statement.
Volt is the second neobank in Australia to shut down after its rival Xinja collapsed last year, also citing difficulties to raise capital. Also in 2021, the National Australia Bank acquired digital-only bank 86 400 in a A$220 million deal.
Volt has advised its customers to stop using their accounts with immediate effect and withdraw their balances by July 5. For term deposit accounts, there will be no break costs due to early closure of the accounts, the bank says.
Founded in 2017, the Sydney-headquartered neobank secured a restricted banking licence in May 2018 and received a full licence to operate as an authorized deposit-taking institution in January 2019.
Volt is estimated to have close to A$100 million (US$69 million) in deposits and around the same amount in mortgages. About 140 staff will be made redundant because of the closure.
So far, the online-only banks approved by regulators in Hong Kong and most recently in Singapore have not reported any commercial vulnerability, despite the challenging global economic conditions.
Covid-related restrictions in the two financial hubs likely proved an advantage to the neobanks. Hong Kong has awarded eight digital banking licences, and Singapore has so far issued two with two more to follow.