<bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Xinja announced plans to shutter by mid-January 2021, citing pandemic impacts and a difficult capital-raising environment, ZDNet <a href="https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly93d3cuemRuZXQuY29tL2FydGljbGUveGluamEtYmFuay1oYW5kcy1iYWNrLWF1c3RyYWxpYW4tYmFua2luZy1saWNlbmNlLWFzLWl0LXdpdGhkcmF3cy1mcm9tLWJhbmtpbmctcHJvZHVjdHMv/5d233c18f730436f2414784fBc4125ebf" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly93d3cuemRuZXQuY29tL2FydGljbGUveGluamEtYmFuay1oYW5kcy1iYWNrLWF1c3RyYWxpYW4tYmFua2luZy1saWNlbmNlLWFzLWl0LXdpdGhkcmF3cy1mcm9tLWJhbmtpbmctcHJvZHVjdHMv/5d233c18f730436f2414784fBc4125ebf&source=gmail&ust=1608294417255000&usg=AFQjCNFDyTZatp3DX8tYXIU43GRgdQzvqA"><u>reports</u></a>.</p><p><img style="float:right;" src="https://static2.businessinsider.com/image/5fdb5488d366e60018098964-1159/Australian neobanks interest rate cuts.png" border="0" alt="Australian neobanks have sacrificed a key selling point by slashing interest rates" data-mce-source="Insider Intelligence"></p><p>Xinja will discontinue its transaction and savings account products and return its authorized deposit-banking institution <a href="https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly94aW5qYS5jb20uYXUvbmV3cy8yMDE5L3hpbmphLWdldHMtZnVsbC1iYW5raW5nLWxpY2VuY2Uv/5d233c18f730436f2414784fBd52db4f2" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly94aW5qYS5jb20uYXUvbmV3cy8yMDE5L3hpbmphLWdldHMtZnVsbC1iYW5raW5nLWxpY2VuY2Uv/5d233c18f730436f2414784fBd52db4f2&source=gmail&ust=1608294417255000&usg=AFQjCNEk0EQFNahtX4fm32NNQcPhvfW7Fg"><u>license</u></a>, which it secured in December 2019. The neobank is encouraging users to transfer their funds to another banka process regulators are monitoring to ensure that all funds are returned to customers. Xinja noted that "if circumstances permit," it will focus on other ventures, like its US share trading platform Dabble, which <a href="https://e.businessinsider.com/click/20973571.9413/aHR0cHM6Ly9pYnNpbnRlbGxpZ2VuY2UuY29tL2licy1qb3VybmFsL2licy1uZXdzL3hpbmphLWJhbmstdG8tbGF1bmNoLXVzLXNoYXJlLXBsYXRmb3JtLWZvci1hdXN0cmFsaWFuLWludmVzdG9ycy8/593e245ecbcf487e6c8b4567B2e97202a" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.businessinsider.com/click/20973571.9413/aHR0cHM6Ly9pYnNpbnRlbGxpZ2VuY2UuY29tL2licy1qb3VybmFsL2licy1uZXdzL3hpbmphLWJhbmstdG8tbGF1bmNoLXVzLXNoYXJlLXBsYXRmb3JtLWZvci1hdXN0cmFsaWFuLWludmVzdG9ycy8/593e245ecbcf487e6c8b4567B2e97202a&source=gmail&ust=1608294417255000&usg=AFQjCNG19aEzdtbrnVtbQIUwq44t8A0s2A"><u>debuted</u></a> in July.</p><p>Xinja was among several Australian neobanks that appeared<a href="https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly9jb250ZW50LW5hMS5lbWFya2V0ZXIuY29tL3RoZS1nbG9iYWwtbmVvYmFua3MtcmVwb3J0LWhvdy1uZW9iYW5rcy1hcmUtdGFraW5nLWFkdmFudGFnZS1vZi1vcHBvcnR1bml0aWVzLWluLWtleS1tYXJrZXRzLXRvLWluZm9ybS10aGVpci1wcm9maXRhYmlsaXR5LXN0cmF0ZWdpZXMtMjAxOS0xMQ/5d233c18f730436f2414784fB3b4fb7e1" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly9jb250ZW50LW5hMS5lbWFya2V0ZXIuY29tL3RoZS1nbG9iYWwtbmVvYmFua3MtcmVwb3J0LWhvdy1uZW9iYW5rcy1hcmUtdGFraW5nLWFkdmFudGFnZS1vZi1vcHBvcnR1bml0aWVzLWluLWtleS1tYXJrZXRzLXRvLWluZm9ybS10aGVpci1wcm9maXRhYmlsaXR5LXN0cmF0ZWdpZXMtMjAxOS0xMQ/5d233c18f730436f2414784fB3b4fb7e1&source=gmail&ust=1608294417255000&usg=AFQjCNEw9y9fzGUP93D5BioKksTFNJK76Q"> <u>primed</u></a> for success prior to the pandemic:</p><ul><li>2019 was a major growth year for Australian neobanks in the incumbent-dominated market. Regulatory shifts in 2018 enabled Australian neobanks like Xinja, 86 400, Judo, and Volt to compete with established lenders, and laid strong foundations for growth the following year. High-yield savings accounts were a key customer draw, and the neobanks' deposits skyrocketed as a result: Xinja had amassed <a href="https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly93d3cuZmluZGVyLmNvbS5hdS94aW5qYS1wYXVzZXMtc3Rhc2gtYWNjb3VudC1jdXN0b21lcnM/5d233c18f730436f2414784fB8f17fd99" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly93d3cuZmluZGVyLmNvbS5hdS94aW5qYS1wYXVzZXMtc3Rhc2gtYWNjb3VudC1jdXN0b21lcnM/5d233c18f730436f2414784fB8f17fd99&source=gmail&ust=1608294417255000&usg=AFQjCNElShW2R5e7WhC_tjSe_TtkqqVJEQ"><u>AU$350 million</u></a> ($243.3 million) in deposits less than two months after launch.</li><li>But high costs associated with its high interest proved unsustainable for Xinja. The neobank <a href="https://e.businessinsider.com/click/19631756.10175/aHR0cHM6Ly93d3cuYnVzaW5lc3NpbnNpZGVyLmNvbS5hdS94aW5qYS1zYXZpbmdzLWFjY291bnQtcGF1c2UtbmVvYmFua3MtcmJhLXJhdGUtY3V0LTIwMjAtMw/593e245ecbcf487e6c8b4567B6aa6b299" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.businessinsider.com/click/19631756.10175/aHR0cHM6Ly93d3cuYnVzaW5lc3NpbnNpZGVyLmNvbS5hdS94aW5qYS1zYXZpbmdzLWFjY291bnQtcGF1c2UtbmVvYmFua3MtcmJhLXJhdGUtY3V0LTIwMjAtMw/593e245ecbcf487e6c8b4567B6aa6b299&source=gmail&ust=1608294417255000&usg=AFQjCNEi-ETTbWTol1VenE3zs78eHh4jJw"><u>paused</u></a> new customer onboarding in early March in an effort to maintain its high interest rate for existing customers. But since then, it's cut savings interest rates several times and <a href="https://e.insiderintelligence.com/click/22409572.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" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.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&source=gmail&ust=1608294417255000&usg=AFQjCNEY5V4QwY6ZLy0injKK8YD7BIjuqg"><u>limited</u></a> its maximum interest rate threshold to AU$50,000 ($34,756). The initial suspension of new account onboarding likely stalled the impressive customer acquisition and deposit momentum Xinja experienced in its first few months: It currently <a href="https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly9hdS5maW5hbmNlLnlhaG9vLmNvbS9uZXdzL3hpbmphLWNsb3Nlcy1hdXN0cmFsaWFuLWFjY291bnRzLTAyNDgwNzY0NC5odG1s/5d233c18f730436f2414784fB52d21929" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly9hdS5maW5hbmNlLnlhaG9vLmNvbS9uZXdzL3hpbmphLWNsb3Nlcy1hdXN0cmFsaWFuLWFjY291bnRzLTAyNDgwNzY0NC5odG1s/5d233c18f730436f2414784fB52d21929&source=gmail&ust=1608294417255000&usg=AFQjCNFxamBCxqqkB0wjAt0IYZoJolh56Q"><u>counts</u></a> nearly AU$500 million ($347.6 million) in deposits and 47,000 accounts. Further, Xinja's auditors said last month that the neobank was "highly dependent" on <a href="https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly93d3cuc21oLmNvbS5hdS9idXNpbmVzcy9iYW5raW5nLWFuZC1maW5hbmNlL3NvYXJpbmctbG9zc2VzLW5vdC1hLWdvaW5nLWNvbmNlcm4tZm9yLXhpbmphLWZvdW5kZXItMjAyMDExMDEtcDU2YWs2Lmh0bWw/5d233c18f730436f2414784fBdf764031" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.4/aHR0cHM6Ly93d3cuc21oLmNvbS5hdS9idXNpbmVzcy9iYW5raW5nLWFuZC1maW5hbmNlL3NvYXJpbmctbG9zc2VzLW5vdC1hLWdvaW5nLWNvbmNlcm4tZm9yLXhpbmphLWZvdW5kZXItMjAyMDExMDEtcDU2YWs2Lmh0bWw/5d233c18f730436f2414784fBdf764031&source=gmail&ust=1608294417255000&usg=AFQjCNEfsa5sCduAm3rcVw2LMy-oUT6QUA"><u>raising</u></a> additional capital to continue operating.</li></ul><p>All Australian neobanks have sacrificed a key selling point by slashing interest ratesmaking it integral to diversify offerings into other areas. None have been spared from pandemic-related difficulties: 86 400, Volt, and Up Bank <a href="https://e.businessinsider.com/click/21768715.6862/aHR0cHM6Ly93d3cuZmluZGVyLmNvbS5hdS94aW5qYS11cC04Ni00MDAtY3V0LXNhdmluZ3MtcmF0ZXM/5af0b5dd95a7a126817e289cB0903a047" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.businessinsider.com/click/21768715.6862/aHR0cHM6Ly93d3cuZmluZGVyLmNvbS5hdS94aW5qYS11cC04Ni00MDAtY3V0LXNhdmluZ3MtcmF0ZXM/5af0b5dd95a7a126817e289cB0903a047&source=gmail&ust=1608294417255000&usg=AFQjCNGSCQA4q1YCKLfYP0zBP3nwJizGVw"><u>cut</u></a> interest rates several times since March, despite those rates being a competitive advantage over incumbents.</p><p>Continuously lowering interest rates ultimately makes it necessary for neobanks to introduce other value-added features, such as money management tools, to continue driving customer acquisition and depositsand in turn attract investors.</p><p>To sustain their largely fee-free business models, a number of neobanks in Australia are looking beyond bank accounts to establish a niche in other revenue-generating lines of business: 86 400 is doubling down on <a href="https://e.insiderintelligence.com/click/22409572.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" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.insiderintelligence.com/click/22409572.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&source=gmail&ust=1608294417255000&usg=AFQjCNEVUta8qXpYidm3IEspzpteQVG8Ug"><u>mortgages</u></a>, for example, while Volt is wading into <a href="https://e.businessinsider.com/click/22409572.4/aHR0cHM6Ly93d3cuYnVzaW5lc3NpbnNpZGVyLmNvbS9taWNyb3NvZnQtbGFiMy1wYXJ0bmVyaW5nLXdpdGgtdm9sdC10by1kZXZlbG9wLWJhYXMtb2ZmZXJpbmctMjAyMC05/5d233c18f730436f2414784fB35b92713" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url'q=https://e.businessinsider.com/click/22409572.4/aHR0cHM6Ly93d3cuYnVzaW5lc3NpbnNpZGVyLmNvbS9taWNyb3NvZnQtbGFiMy1wYXJ0bmVyaW5nLXdpdGgtdm9sdC10by1kZXZlbG9wLWJhYXMtb2ZmZXJpbmctMjAyMC05/5d233c18f730436f2414784fB35b92713&source=gmail&ust=1608294417255000&usg=AFQjCNERTrcYsg6N_5FRtLyPkTzXHW_xaQ"><u>Banking as a Service</u></a>.</p><p><strong><em>Want to read more stories like this one' Here's how you can gain access:</em></strong></p><ol><li>Join other Insider Intelligence clients who receive this Briefing, along with other Banking forecasts, briefings, charts, and research reports to their inboxes each day. <a href="https://www.insiderintelligence.com/become-a-client/'IR=T&itm_source=businessinsider&itm_medium=content_marketing&itm_campaign=briefing_post&itm_content=bottom_bullets&itm_term=enterprise_text_link-xinja-closes-doors-after-one-year-thanks-to-covid19-2020-12">>> <strong>Become a Client</strong></a></li><li>Explore related topics more in depth. <a href="https://store.businessinsider.com/collections/banking'IR=T&itm_source=businessinsider&itm_medium=content_marketing&itm_campaign=briefing_post&itm_content=bottom_bullets&itm_term=store_text_link-xinja-closes-doors-after-one-year-thanks-to-covid19-2020-12">>> <strong>Browse Our Coverage</strong></a></li></ol><p><em><strong><a href="https://subscriptions.emarketer.com/">Current subscribers can access the entire Insider Intelligence content archive here.</a></strong></em></p><p><a href="https://www.businessinsider.com/xinja-closes-doors-after-one-year-thanks-to-covid19-2020-12#comments">Join the conversation about this story »</a></p>
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