Neobank Xinja has become the first authorised deposit-taking institution (ADI) in Australia to return its deposits to customers, after finalising its exit from the local banking scene.
Xinja began returning millions of dollars in deposits to customers in December, following its shock announcement it intended to cease operating as a bank and return its ADI license to the Australian Prudential Regulation Authority (APRA).
This return of deposits process was finalised on Tuesday, said APRA, with Xinja transferring its remaining customer accounts to NAB.
When Xinja announced its closure on December 16, it had 37,884 customers with 54,357 individual deposits, worth more than $252 million.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
APRA said most of these deposits were transferred to other banks over the past month, with the remaining 4,176 accounts holding deposits worth $65,809 now with NAB, either in customers’ existing NAB accounts or new ones created for this purpose.
The transfer to NAB was formally approved by APRA under its legislative powers, and affected customers have been notified by both Xinja and NAB.
A spokesperson for NAB told the Australian Financial Review affected Xinja customers will be given access to fee-free accounts and they can choose to withdraw the funds at any time.
APRA said Xinja will formally hand back its banking licence to APRA in the next few weeks.
It brings to a close a challenging 12 months for Xinja, which was founded in 2017.
The neobank secured its full ADI banking licence in September 2019, and launched its Stash saving account in January 2020, with $100 million in deposits reportedly flowing into accounts within the first three weeks.
In March 2020, the neobank announced it had secured a $433 million investment in the business from Dubai-based World Investments, to be rolled out over 24 months.
However, news reports this week have cast doubt on the origins of the deal, which did not eventuate during 2020.
Xinja co-founder and chief Eric Wilson said in December its decision to close the banking operations of the business was “an incredibly tough call”.
“But after COVID-19 and an increasingly difficult capital-raising environment affecting who is willing to invest in a new bank, we are convinced the best thing for Xinja is to pivot away from being a bank,” he said in an email to customers.