After struggling to raise the capital it needed to continue its operations, Volt has officially left the neobank building.
👉 Background: A neobank is a type of direct bank that operates online, offering traditional services digitally. Aussie neobank Volt was founded back in 2017, and was the first to be offered a full banking licence.
👉 What happened: Volt struggled to get out of the gates as a consumer bank. It then pivoted to banking-as-a-service.... But that wasn't enough to keep the lights on. So, Volt told the regs it's shutting up shop and handing back its licence.
👉 What else: Volt said the pandemic, coupled with the current economic climate, meant it couldn't secure the $200 million it needed to keep going. But it ain't the only neobank to go under.
💡Neobanks came in with a promise to revolutionise the way consumers access their finances. It was all about personalisation and convenience. But the challenge has been making the banking business model work.
💡 Aussie banks are some of the biggest profit machines in the world. But data shows that less than 5% of neobanks have broken even and most actually earn less than $30 in revenue per customer annually.
💡It’s hard for neobanks to scale up and monetise their services, particularly when their free features are a big selling point. Australia had five main neobanks: Xinja, 86400, Volt, Up and Judo... Now just Up and Judo remain in their original form.
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