Neobank Xinja pulls out of Australia just a year after launching
Xinja has called it a day, announcing it will close its transaction and savings account product, return the money to customers and hand back its banking license to the Australian Prudential Regulation Authority (APRA).
The digital-only neobank has blamed the decision on the coronavirus pandemic and a failure to attract investment.
"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," the company said in a statement.
While the company is closing its domestic banking operations, it may continue its US-based share trading product, Dabble.
Xinja was a notable hold-out earlier this year when the RBA cut the cash rate when COVID-19 kicked off, claiming it wanted to protect existing customers.
However, in May it dropped its Stash savings account rate from 2.25% to 1.8%.
"We held the rate at 2.25% despite successive rate cuts from the Reserve Bank, and we are probably the only bank to have done that," Xinja CEO Eric Wilson said at the time.
"We thought it was the right thing to do to protect our current customers rather than chasing new ones, and we achieved it through hitting a pause on opening any new Stash accounts. "However, it is a variable rate, and we can't ignore two Reserve Bank rate cuts indefinitely."
Xinja is now in the process of returning customers' money, which will continue over the next few weeks.
"Under the terms of the product, Xinja is giving its customers the required seven-day notice before closing the Stash account and will be encouraging them to transfer any funds out of bank accounts as soon as possible."
"The Xinja app and support teams will be available to help customers make the transition during this period."