Xinja Bank, which received a banking licence just six months ago, said it has to stop taking new deposits just a day after kicking off a new funding round and crowing that funds flowing into its high-interest savings account had surged above $300 million.
The fintech neobank said it wanted to shield customers from ultra low interest rates as major banks sliced deposit rates in response to the Reserve Bank’s emergency rate cut on Tuesday. It refused to cut the 2.25 per cent deposit rate it has used to lure customers into its accounts.
Thus, neobank Xinja will hand back its banking licence and return most of the money to deposit holders before the year is out after the controversial outfit capitulated to the pressure of paying out interest without having a lending product in the market to offset the cash burn.
Xinja Bank has announced its plans to withdraw its Transaction and Savings account products and return its ADI licence.
“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”, Xinja said. “We hope to refocus the business in other areas such as our US share trading product, Dabble, should circumstances allow.”
Xinja is already safely executing the return of customers’ deposits, which will continue over the next couple of weeks. The Australian Prudential Regulation Authority (APRA) is closely monitoring Xinja’s return of deposits to ensure that funds are returned in an orderly and timely manner.
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 Xinja App and support teams will be available to help customers make the transition during this period.
The Australian Prudential Regulation Authority (APRA) notes today’s announcement by Xinja Bank Limited (Xinja) that it intends to return all funds to depositors and ultimately relinquish its licence to operate as an authorised deposit-taking institution (ADI).
„Xinja’s decision to exit the banking industry and pursue other business opportunities is a commercial decision for Xinja. As Australia’s financial safety regulator, APRA will closely monitor the return of deposits to ensure all funds are returned to Xinja depositors in an orderly and timely manner,” APRA said in a press release.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
