It wasn't too long ago that we were all hearing about the 'neobank' and how it was going to disrupt the entrenched power of the famous big four ASX banks. The ASX banks, some more than a century old, could not compete with the lithe, disruptive new banks, unburdened by the creaking infrastructure and shaky reputations of the old bank shares. Or at least that's what we heard.
Well, today, that rosy vision is in tatters. Neobank 36 400 was bought out by National Australia Bank Ltd (ASX: NAB) last year. Fellow neobank Xinja collapsed a few months later. And today, we've got the news that its neobanking peer Volt has also hit the wall.
This morning, Volt posted a statement on its website. Here's some of what it said:
Volt Bank Limited (Volt) is closing its deposit taking business and intends to return its banking licence. Customers need to withdraw their funds from their Volt bank accounts before the 5th of July 2022
Volt has made the difficult decision to close its deposit taking business and has commenced the process of returning all deposits to its account holders… It is recommended that all customers stop using their accounts immediately.
Image source: Getty Images
Bank shares rise amid Volt closing its (digital) doors
So Volt has sparked out. Shorted. So how did the ASX bank shares react today? Well, the S&P/ASX 200 Index (ASX: XJO) closed down 0.64% today. But shares of the big four did a little better. Commonwealth Bank of Australia (ASX: CBA) also ended up down 0.58% at $93.00 a share. But it was the only member of the big four to record a loss.
Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares rose by 0.94% to $22.63. NAB closed up 1.01% at $28.07. And Westpac Banking Corp (ASX: WBC) shares lifted by 0.96% to $19.94.
So it's unclear whether the Volt news out this morning was alone responsible for saving the ASX 200 bank shares from the wider market's falls today. But it is certainly likely to be a factor in the banks' marked outperformance today. So Australia's experiment with neobanks certainly seems to be at a low point. The major ASX banks aren't called the big four for any old reason, it seems.
