Fundraising woes cause Australia’s first online-only bank, Volt, to shut down
Volt Bank Ltd, Australia’s first exclusively online bank to gain a banking license in the country, said it would shut down, return deposits and sell its mortgage book after failing to raise sufficient finances to fund the business. Volt’s collapse is a further blow to a business model that the Australian regulators and government promoted heavily after a 2018 investigation into misconduct in the finance sector led to a loosening of rules for new banking entrants. Rising interest rates and inflation this year have made it harder for online-only banks, called neobanks in Australia, to compete with established lenders, making fundraising much more difficult. Though the pandemic and COVID-19 restrictions triggered massive demand for home loans in Australia, the shift to working at home also prompted traditional banks to embark on a digital arms race, narrowing approval times for loans and eroding the competitive advantage of ne obanks. The firm had A$113 million ($78 mill...