Volt Becomes Second Australian Neobank to Shutdown as Funding Dries Up
by Fintech News Singapore June 29, 2022Australian neobank Volt announced that it will be shutting down its deposit-taking business, return all deposits to its customers and turn in its banking license.
The neobank has advised its account holders to transfer any balances in their Volt accounts to another financial institution before the 5th of July 2022.
According to the report by Australian Financial Review (AFR), Volt holds about A$106 million in deposits from 6000 customers.
Volt said that it has also 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.
The Australian Prudential Regulation Authority (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 A$250,000 per account holder under the Financial Claims Scheme.
The neobank added that it 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 its remaining assets.
Volt made the decision to shutter its operations following its unsuccessful attempts to raise US$200 million in a Series F funding round.
Just last year, Volt received an investment of US$15 million from the Australian Finance Group in exchange for a 7.6% stake in the company which was then valued at about US$200 million.
Steve Weston
Steve Weston, CEO of Volt 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.”
Volt is the second neobank in Australia to shut down after Xinja which faced the same decision, pinning the blame on the pandemic and and its struggles to raise capital.
Recent data from consulting firm Simon-Kucher found that neobanks are actually struggling to turn a profit as only 5% of the world’s reported 400 digital banks are out of the red.
