Less than a year after “Australia’s best savings account”, the high interest rate on Xinja’s Stash savings account appears to be a millstone around the neobank’s neck, with the fintech slashing the interest-bearing cap by two-thirds to just $50,000 on any deposits.
With the launch of Xinja US share trading platform Dabble now delayed indefinitely, and the digital bank yet to offer lending, the 1.5% interest offered to Stash account customers appears to be burning a hole in the neobank’s balance sheet, especially after the RBA cut the official cash rate by 15 basis points earlier this month to a new record low of just 0.10%.
The new $50,000 cap for interest of Stash account deposits kicks in on November 23. It was only a month ago that Xinja cut the interest rate offered for a fourth time in nine months, alongside reducing the cap on money you can earn interest on by $95,000 to $150,000. It launched at the start of 2020 paying 2.25% interest on up to a $245,000 cap.
The bank, which launched in 2018, received its full banking license in September last year, has yet to begin lending to customers, and by March this year had $450 million in deposits from 45,000 accounts on its books. That month, when the RBA cut rates to 0.5%, Xinja put a freeze on anyone opening a Stash account, having seen $400 million flow into the “Stash” accounts in just 8 weeks.