Investors liked Volt’s strategy, Weston said, but had been spooked by global economic conditions. He said that Australia doesn’t have a mature venture capital sector with large enough levels of capital needed by banks in their early stages.

“That was what in Australia, the new entrants have found most difficult.”

‘Being a bank, you need a lot more capital than normal businesses. And that really was the challenge that we were unable to overcome.’

Volt CEO Steve Weston

Most of Volt’s website had been taken down on Wednesday morning, except for a few pages urging all customers to stop using their accounts and withdraw their funds. Interest rates on all accounts were set to zero on Wednesday and transfer limits were increased to $250,000.

The company has just over $100 million in deposits and around $100 million in mortgages, and employed 140 people.

“They didn’t join to be in technology or to be a banker, they wanted to change the world of banking,” Weston said. “And that was the dream and that kind of ends now, certainly under our own steam.”

Morningstar analyst Nathan Zaia said the neobank business model had been challenged from the start. “I don’t think the offerings are that differentiated to be able to win enough customers to get to that scale. They essentially relied on their marketing and attracting depositors with some pretty good rates, and that’s not really sustainable,” he said.

He said he would be surprised if there was much interest from investors in digital-only banks in the future. “You might have the best tech in the world, but getting to a point where you can make money from that platform is difficult,” Zaia said.

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Simon Cant, managing partner of Westpac’s Reinventure fund, said the collapse of the neobank didn’t reflect the broader fintech industry, where a number of companies are still growing and raising capital.

However, he noted the difficulties faced by authorised deposit-taking institutions (ADIs) which are regulated by APRA. “I think ADIs are obviously hard because there are very high capital requirements. So I think that’s made it a difficult space for disruptors to operate,” he said.

“The banks are massive in Australia, and most fintechs are not looking at taking on the banks in all of their service offerings. Most fintechs are looking at specific service offerings and going after those and seeing if they can reinvent them, and that’s what fintechs should be doing.”

APRA said it will closely monitor the closing process to ensure funds are returned to Volt depositors in an orderly and timely manner.

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