Australian digital bank, Volt Bank Limited, confirmed on Wednesday its decision to wind down business from returning customer deposits and renouncing its banking license to the prudential regulator.

The neobank holds around AU$113 million ($78 million) in customer deposits, along with AU$80 million of home loans as of April. Additionally, the bank will sell its mortgage book.

The operations of the digital bank went under as it failed to raise enough capital to support the business. It raised almost AU$85 million last year and was seeking another AU$200 million from the market last February.

The neobank was building a ‘banking-as-a-service’ infrastructure that would allow it to provide loans and deposits to partners. However, it needed capital-intensive technology.

“Volt has made the difficult decision to close its deposit-taking business and has commenced the process of returning all deposits to its account holders,” the bank said in an official statement. “Volt will start closing accounts from the 5th of July 2022, so please ensure you have withdrawn all your funds to leave a balance of $0 in all accounts before then.”

It also informed its 140 staff that they are now out of the job.

Crumbling Neobanks

The digital bank received its license from the Australian Prudential Regulation Authority (APRA) in January 2019 when the Australian government and the regulators were heavily promoting the digital-only banking business model.

Moreover, Volt was among the first four such digital banks in Australia that received APRA licenses. One of them, Xinja, also shuttered services, while 86400 was acquired by the National Australia Bank. Now, the shutdown of Volt would only leave Judo, which is struggling with a near record-low stock price.

“Volt is doing everything possible to return the deposits in an orderly and timely manner. The Australian Prudential Regulation Authority (APRA) is closely monitoring this process. In addition to this, deposits are protected under the Australian Government Financial Claims Scheme which guarantees deposits up to $250,000 per account holder,” Volt wrote.

Australian digital bank, Volt Bank Limited, confirmed on Wednesday its decision to wind down business from returning customer deposits and renouncing its banking license to the prudential regulator.

The neobank holds around AU$113 million ($78 million) in customer deposits, along with AU$80 million of home loans as of April. Additionally, the bank will sell its mortgage book.

The operations of the digital bank went under as it failed to raise enough capital to support the business. It raised almost AU$85 million last year and was seeking another AU$200 million from the market last February.

The neobank was building a ‘banking-as-a-service’ infrastructure that would allow it to provide loans and deposits to partners. However, it needed capital-intensive technology.

“Volt has made the difficult decision to close its deposit-taking business and has commenced the process of returning all deposits to its account holders,” the bank said in an official statement. “Volt will start closing accounts from the 5th of July 2022, so please ensure you have withdrawn all your funds to leave a balance of $0 in all accounts before then.”

It also informed its 140 staff that they are now out of the job.

Crumbling Neobanks

The digital bank received its license from the Australian Prudential Regulation Authority (APRA) in January 2019 when the Australian government and the regulators were heavily promoting the digital-only banking business model.

Moreover, Volt was among the first four such digital banks in Australia that received APRA licenses. One of them, Xinja, also shuttered services, while 86400 was acquired by the National Australia Bank. Now, the shutdown of Volt would only leave Judo, which is struggling with a near record-low stock price.

“Volt is doing everything possible to return the deposits in an orderly and timely manner. The Australian Prudential Regulation Authority (APRA) is closely monitoring this process. In addition to this, deposits are protected under the Australian Government Financial Claims Scheme which guarantees deposits up to $250,000 per account holder,” Volt wrote.