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Volt returns money to customers

Volt Bank has handed back more than 5,000 customer deposits following its exit of the banking industry.

The neo-lender announced last month that it was closing its deposit-taking business and returning its banking licence, after it struggled to find enough capital to keep building its digital banking business.

Volt Bank (Volt) chief executive Steve Weston said at the time that the board had “considered all options” but ultimately closing was in the “best interest” of its customers.

At the time of Volt’s announcement, 5,730 customers held deposit accounts with Volt with a total value of $107 million.

Following the decision to shutter its banking business, the return of deposits began on 29 June, with the Australian Prudential Regulation Authority (APRA) closely monitoring the process.

Any customers that did not withdraw funds from Volt Bank in time were automatically moved to National Australia Bank Limited (NAB) (after APRA formally approved the transfer of deposits to the major bank).

In a statement on its website, Volt Bank said “all but a small percentage” of deposits have been transferred to other banking institutions, with those deposits not withdrawn moving to NAB.

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APRA has now confirmed this transfer process has completed, after the remaining 441 accounts  - with a total deposit value of $113,073 - transferred to NAB.

Volt Bank customers whose deposits have been transferred to NAB can elect to leave their funds there or transfer them to another bank of their choice, APRA stated.

The neobank's closure comes soon after Xinja Bank went under at the end of 2020.

At the time of the announcement, Xinja had 37,884 customers with 54,357 individual deposits worth more than $252 million.

Following Xinja’s exit, APRA brought in “stronger requirements” for those wishing to be granted a banking licence.

New banking entrants now need to launch both an income-generating asset product and a deposit product before they can secure a full licence, under APRA’s new standards. 

APRA has now said that, before a bank can even gain a restricted ADI (RADI) licence, new entrants will need to present a business plan, as well as a plan to meet the prudential framework for new ADIs within a period of two years, including launch of products, and a contingency plan, that includes at least one option to execute an orderly and solvent exit from banking.  Similar to Xinja, Volt Bank had launched a savings account but its long-awaited mortgage was still in pilot mode.

 
[Related: Volt Bank to hand back deposits and banking licence]

 

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