A digital bank in Australia has failed, costing 140 staff their jobs and causing 6,000 clients to rush to withdraw their money before next week.
After failing to gather enough money to stay viable, Volt Bank said on Wednesday that it was stopping its deposit-taking operation and would return its banking license.
According to the neobank’s website, “Volt has made the tough choice to terminate its deposit taking operation and has started the process of repaying all deposits to its account holders.”
‘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.’
Volt CEO Steve Weston said the company’s collapse was a “very sad day” when the bank was first introduced in 2017.
“As a team, we’ve created something that Australia truly needs to create financial competition in the market.” According to him, Australia today just lacks the technology and capacity that we have.
But in order to transport that to a public launch, we need fuel for the automobile, and in order to buy fuel, we need money. And in the current market, raising the amount of money we required to scale up was a challenge that we were unable to do.
Customers’ transfer caps have been raised to $250,000, and users are advised to stop utilizing their accounts right now.
Volt has deposits totaling more over $100 million.
As a bank, Mr. Weston claimed his company required significantly more capital than others, but it was a difficulty “we were unable to overcome.”
Since February, the business had hoped to obtain $200 million, but problems related to the Covid epidemic had significantly hampered its efforts.
The deposits of the funds are being watched over by APRA, the Australian Prudential Regulation Authority.
The company was granted its banking licence in 2019, the first start-up in Australia to be granted one.
Other neobanks such as Xinja have also collapsed due to problems securing money.
Neobanks operate exclusively online with no in-person branches.
