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. Customers need to transfer the balances held in all Volt accounts to a nominated bank account with another financial institution before the 5th of July 2022, the bank said.
Rising inflation and interest rates this year have made it harder for online-only banks, called neobanks in Australia, to compete with established lenders, making fundraising much more difficult.
Its collapse is a further blow to a business model that the Australian government and regulators promoted heavily after a 2018 inquiry into misconduct in the finance industry led to a loosening of rules for new banking entrants.
Volt Bank official statement:
„Volt Bank Limited (Volt) today confirmed that it has notified the Australian Prudential Regulation Authority (APRA) of its intention to close its deposit-taking business, return all deposits to its customers and return its banking licence
The decision has been taken by the Volt Board having reviewed recent progress in capital raising initiatives globally which have been unsuccessful in raising sufficient additional funds to support the business.
Volt CEO Steve Weston said: “In reaching this difficult decision we have considered all options but ultimately, we have made this call in the best interest of our customers.”
Volt has executed a transaction to sell its mortgage portfolio and begun the process of returning all deposits to customers in full. The company has the necessary liquidity available at hand to facilitate this process.
APRA is closely monitoring the return of funds and all customer deposits held with Volt remain safe and are guaranteed by the government up to $250,000 per account holder under the Financial Claims Scheme.
Volt has taken steps to reduce all expenses and staff numbers, other than those required to support the orderly return of deposits and pursue a realisation of the value of our remaining assets.
Volt would like to take this opportunity to thank the customers, team members and investors who supported the business from its inception.
Mr Weston said: “The entire Volt team is deeply disappointed to have reached this point. We are enormously grateful to everyone who believed in what we were trying to achieve and worked tirelessly to make Volt a success.”
The company had A$113 million ($78 million) in deposits and A$80 million of home loans as of April.
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.
„A lot of the … disruptors are seeing their models compromised because interest rates are rising,” said Brian Johnson, a banking analyst at Jefferies.
„It really goes back to the big-scale incumbents, which is the major banks, and I think this is a trend that we’re going to see continue to happen around the world.„
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:
