Volt, Australia's first online-only bank, shuts down due to fund-raising woes
reuters.com
reuters.com
> "Rising inflation and interest rates this year have made it harder for online-only banks, called neobanks in Australia, to compete with established lenders, making fundraising much more difficult."
The first online-only bank in Norway was founded all the way back in 2000, and has overall been very successful. (Unfortunately, in my opinion, they were bought out by the largest local bank this year.) I understand how regulations and local habits/expectations can mean that an online-only back won't work in certain countries. For example, I can't imagine it'd work very well somewhere like Germany which is very conservative when it comes to tech in finance – cash and faxed contracts still being very much a thing and so on (correct me if I'm wrong, though). However, Australia doesn't strike me as being as conservative as Germany in this sense, so I'd be interested in hearing more about why online-only banking doesn't seem to be doing well there.
inflation cause price of the product to go out but also the cost of the production, if you don't have a profitable product this make it even more negative cash flow.
also people are less likely to take debt if their fear how to pay back.
i don't know Australia but most bank offer solid smartphones and web base service( in south-america) meaning that maybe isn't that much of deal breaker anymore, you can do similar things whit the competition and have a full physical service to fall back if it something go wrong.
Most banking is fee free, if your pay check goes into the account.
FX fees are insane, but Wise solve that.
Payments are free, and in most cases instant.
Mortgages are competitive, and not necessarily through banks.
Other lending has already been displaced from banking.
Majors have apps and atm networks.
Features like withdrawing from an atm using your phone.
PayWave has been around for years. Apple Pay has been adopted.
Not really sure what the wedge would be for an online only bank.
Germany has had multiple Neobanks since at least a decade and they're fairly popular.
They do still offer loans, but they're "white-label" loans from other providers, which means the margins are way thinner and you're mostly at the mercy of the "white-label" provider when it comes to setting your lower threshold.
My guess is people don't mind paying an extra quarter of a percent or so if they get a really nice app and modern banking experience when interest rates are low, but with recent rate hikes they're probably shopping around and going with the best rate they can get.
The other factor is that traditional Australian banks have put efforts into modernising themselves over the past few years, spending a lot on their apps etc. so the differences between "digital" banks and traditional banks are shrinking.
Brick and mortar-banks have their advantage too. Most in Germany are either a credit union or owned by the public. You have someone responsible for you you can speak with in person and they can often offer you better terms on loans.
I think the point was that Volt was the first domestic online-only bank. Additionally they seem to be the first "neobank" though I haven't found any definition that is able to distinguish them from a "direct bank", which also applies to ING.
I think ING has a customer service lounge or two, which just about disqualifies it. In practice, neobanks seem to refer to non-big 4 banks.
Direct or online banks come from big banking groups but aren't always direct subsidiaries. Most of them seized an opportunity to enter a market with no or little physical presence. ING did that in several European countries, and scaled back, since then. I believe it started around 1999/2000 for the earliest players.