By Zoran Temelkov July, 2022
The Aussie neobank Volt announced that it would close its deposit-taking business operations due to its failure to raise sufficient levels of capital during the pandemic. The company was unsuccessful in its effort to secure $200 million in a Series F funding round this year. The funds were intended to support the company’s plan to write a mortgage and expand its operations.
The announcement of ceasing operations came on the 29th of June 2022. The neobank informed its customers, around 6000, to withdraw their funds from their Volt accounts until the 5th of July 2022. Volt initiated the process to return deposits to its customers, and it is expected to return around $100 million in deposits. Interest on customers’ deposits is calculated until the 29th of June, after which the interest rate is set to zero.
The Australian Prudential Regulation Authority (APRA) is monitoring the closure of Volt and the process of returning deposits to its customers. Volt received its Australian banking license in 2019, and after closing its activities, it will return its license to the issuing regulator.
The unexpected closure of Volt comes shortly after the collapse of another Australian neobank Xinja and the acquisition of 86400 neobank by the National Australian Bank (NAB).
Xinja neobank was closed in 2020 due to a mismatch between interest expenses and interest income. The neobank paid its customers interest on their deposits before earning income from its lending operations.