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June 29, 2022

Australian neobank Volt to close business, return deposits and licence

Australian neobank Volt Bank has announced plans to close its deposit-taking business, return all deposits to customers and hand back its banking licence.

Volt said the decision was taken after the bank failed to raise additional capital to support the business.

“Volt has executed a transaction to sell its mortgage portfolio and begun the process of returning all deposits to customers in full,” the bank said.

The neobank has asked its customers to transfer the balances held in all Volt accounts to another bank account before 5 July 2022.

Volt said it has notified the Australian Prudential Regulation Authority (APRA) of its intention and the regulator is closely monitoring the return of funds to customers.

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.

“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 digital challenger has taken steps to reduce all expenses and staff numbers. According to AFR’s report, the decision resulted in 140 redundancies.

The turmoil across global markets, soaring inflation and interest rates have made it difficult for digital-only banks to raise funds and compete with established banks.

Consulting firm Simon-Kucher estimates that there are currently around 400 neobanks around the world and only 5% of these challenger banks have managed to reach a breakeven point.

Notably, Volt along with Xinja, 86400 and Judo Bank was among the first neobanks to have secured a licence from APRA.

Of these, Xinja closed operations in 2020 and 86400 was acquired by National Australia Bank.

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