Australia's Volt Bank, which is in the process of shuttering its services, has returned the deposits of all of its customers, the Australian Prudential Regulation Authority (APRA) announced on Monday.
Volt, which was among the first Australian neobanks, cited funding woes behind its decision to shut down its services in late June. Then, it was holding AU$107 million ($74 million) in deposits from 5730 customers, all of which now have been transferred.
While the majority of Volt’s customers initiated the transfers, the challenger bank voluntarily transferred the balanced of 411 customers, with a total deposit value of AU$113,073, to the National Australia Bank (NAB).
“APRA closely monitored the return of deposits process, and formally approved the transfer of deposits to NAB using its powers under the Financial Sector (Transfer and Restructure) Act 1999 and Banking Act 1959,” the APRA stated.
Challenges to Australian Neobanks
Volt received its Australia banking license in 2019 along with three other challenger banks. Two of them, including Volt, shuttered services, while one was acquired by the NAB. The remaining, Judo, is struggling with a near record-low stock price.
The Australian regulators heavily promoted the services of digital banks when they started to hand out the licenses, but that did not work out.
In the case of Volt, which was developing a ‘banking-as-a-service’ infrastructure for providing loans and deposits to partners, the firm fell short of proceeds to fund its capital-intensive technology.
It raised almost AU$85 million last year and was seeking another AU$200 million from the market last February, but that could now save its business.
Furthermore, the challenger bank terminated its 140 staff.
“Volt will hand back its ADI license formally to APRA in the next few weeks,” the APRA added.
