Neobank Xinja has halted the roll-out of its new savings account as record low rates weigh on its business.
Xinja took the “unprecedented” step of stopping the opening of new Stash accounts rather than dropping the interest rate paid to existing customers following the RBA’s latest cut.
“Because these are uncertain times for everyone, we are holding our rate steady, at 2.25 per cent, but hitting the pause button on customers opening Stash accounts,” said Eric Wilson, Xinja founder and CEO.
“No more new Stash accounts means no increase in cost to Xinja, and means we can protect the interest rate for people already with a Stash account.”
The announcement comes as Xinja has had its “biggest couple of days ever”. The neobank only recently began the roll-out of its new Stash account and was targeting $1 billion in deposits by year’s end after record low rates caused a rush of $200 million in funds to the start-up in less than a month.
“When faced with higher than expected deposit flows, and an RBA rate cut, most banks would just drop deposit interest rates, hurting existing customers while chasing new ones,” Mr Wilson wrote.
“That’s not what Xinja is about.”
The neobank is also gearing up for the launch of a lending product later this year.
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