- Xinja has announced on Wednesday it is bowing out of banking for good.
- The neobank released a statement to customers, saying it would return all deposits before shutting down its bank accounts.
- It suggested it may persist with its US share trading platform Dabble, “if circumstances allow”.
- Visit Business Insider Australia’s homepage for more stories.
One of Australia’s first neobanks is shutting down, scarcely more a year after launching.
Xinja, which spearheaded the PR push for digital banking in Australia, announced on Wednesday that it would be bowing out of banking for good.
“Xinja has decided to discontinue the Xinja Bank Account, Stash Account and all services relating to these products,” the neobank said in a public statement.
“As part of this decision, Xinja will be exiting from banking business and returning its ADI licence, effectively stopping being a bank.”
Xinja suggests it may continue its US share trading platform Dabble launched just months ago “should circumstances allow”.
It will now return hundreds of millions of dollars worth of customer deposits. While Xinja said it would give customers “ample time” to transfer money out of its coffers, it encourages them to do it before January 6.
Clearly, the shutdown phase is now in full swing, with Xinja asking customers to cancel any direct debits “as soon as possible” and with pay and card functions ceasing on January 15. All deposits stopped earning interest from Monday.
Emphasising the security of those deposits, the banking regulator APRA released its own statement.
“Xinja’s decision to exit the banking industry and pursue other business opportunities is a commercial decision for Xinja,” APRA said.
“As Australia’s financial safety regulator, APRA will closely monitor the return of deposits to ensure all funds are returned to Xinja depositors in an orderly and timely manner.”
Collapse of one of Australia’s first neobanks
It marks an almighty fall from grace from the neobank, which along with 86 400 was the first to launch to the public in September last year.
CEO and co-founder Eric Wilson had in many ways led the charge, raising the profile of neobanks and promising they would finally help inject competition into Australia’s long-held banking oligopoly.
Plenty of people bought into the vision. Xinja managed to close two record-breaking equity crowdfunding rounds, raising $5 million from thousands of small investors – investors who may now have lost their stake.
But things began to sour in 2020. Without a lending product, Xinja was haemorrhaging capital as it paid out more than $7 million in interest payments a year without any revenue streams.
Another record investment, $433 million from a Dubai investment group was meanwhile delayed, due ostensibly to the onset of the coronavirus pandemic as well as foreign ownership limits.
Wilson told Business Insider Australia earlier in the year that the bank had been “punched in the mouth” but that it was picking itself back up off the mat.
A few short months later, the once-promising neobank is down for the count.