Upstart neobank Xinja will hand back its banking licence and return deposits after being toppled by one of the worst years on record.
Xinja has announced that it will relinquish its banking licence despite widespread uptake of its Stash savings account and a $400 million cash injection from Dubai-based Emirates World Investments.
“After a year marked by COVID-19 and an increasingly difficult capital-raising environment, and following a review of the market in Australia, Xinja has decided to withdraw the bank account and Stash (savings) account and cease being a bank,” Xinja said.
“This was an incredibly hard decision. We hope to refocus the business in other areas such as our US share trading product, Dabble, should circumstances allow.”
The Stash account initially offered an interest rate of 2.25 per cent, which Xinja was forced to slash to 1.8 per cent in the face of multiple rate cuts by the RBA. Despite that, the neobank was targeting $1 billion in deposits by the end of 2020 and was preparing to launch a lending product.
“Xinja’s decision to exit the banking industry and pursue other business opportunities is a commercial decision for Xinja,” APRA said in a statement.
“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.”