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The Australian Prudential Regulation Authority (APRA) has officially revoked in1Bank Limited’s (in1Bank) authorised deposit-taking institution (ADI) licence, marking the end of the neobank’s journey.
Digital bank in1Bank – a neo-lender that offers personal banking, business banking, and home loans – was first established in 2019 with a restricted banking licence before the Chinese-founded neobank gained a full banking licence in 2023.
However, the bank announced in January that it had decided to cease banking activities, return customer deposits and hand back its banking licence.
At the time of its announcement, in1Bank had more than 1,150 customer deposit accounts with deposits totalling approximately $15.9 million.
The bank then began returning deposits to customers, in a process that was completed in March.
According to the lender, around 14 customers had not responded to its requests to confirm the details of their nominated transfer destination by the deadline of 13 March 2026.
As such, these customers have had their balances, believed to total around $14,500, transferred to the Commonwealth Bank of Australia (CBA).
Both in1Bank and CBA have contacted affected customers to advise them of the transfer, and these customers will need to contact the major bank for details on how to access their funds from their new CBA account.
The end of the RADI regime?
The bank is the latest neobank to fold, showcasing the difficulties that new entrants have in setting up in Australia.
Neobanks, once touted as the new disruptors of the banking industry, have almost entirely disappeared from the landscape in recent years.
While the prudential regulator brought in a Restricted ADI (RADI) licence in 2018 to provide a phased and easier entry into the banking sector, only seven RADI licences were issued, with five of those transitioning to full banking licences. There are currently no RADIs in operation in Australia.
The most recent neobanks that have successfully moved from RADI to a full banking licence were Avenue Bank (which became a full bank in 2024), which specialises in bank guarantees and Alex Bank (which became a full bank in 2022).
However, several RADIs have since exited the industry, with some having never started operations.
The last time a RADI licence was granted was in 2022, when International Bank of Australia Pty Limited was issued a restricted banking licence. However, this licence was revoked in October 2024, at the request of the group, after it failed to begin operations.
It followed on from a swathe of other neobank closures. Volt Bank closed in 2022 with 5,730 customers and $107 million in deposits, with its customers moved over to Resimac. Volt Bank had launched a savings account, but its long-awaited mortgage was still in pilot mode.
In 2020, Xinja Bank completed its return of customer deposits and transferred the remaining tail of deposits to National Australia Bank (NAB) after making the shock announcement that it would hand back its banking licence and cease offering banking products. At the time of the announcement, Xinja had 37,884 customers with 54,357 individual deposits worth more than $252 million.
Following Xinja’s exit, APRA brought in “stronger requirements” for those wishing to be granted a banking licence, including requirements to launch both an income-generating asset product and a deposit product before they can secure a full licence.
Given the issues, APRA last year suggested it wanted to shelve the RADI licensing scheme entirely.
In its consultation on improving the licensing framework (the release of final criteria and guidance is expected imminently), APRA noted that while the RADI pathway had initially helped attract more new entrants to the banking sector, there has been limited take-up of the pathway in recent years, with the last application received over four years ago.
It noted the pathway has also been “challenging” for applicants, particularly with raising capital, with the phased approach to developing a bank resulting in considerable capital being expended and challenges in operationalising the business,” the regulator said.
“Taken together, these observations suggest that the RADI pathway has not achieved its intended purpose of providing a simpler and effective pathway to obtaining a banking licence,” APRA said in its consultation last year.
As such, it called on stakeholders to outline their views on the RADI pathway and whether to discontinue this pathway for future new entrants.
Instead, APRA is proposing new criteria for granting a banking licence. This includes the requirement that an applicant must prove within 12 months that they can work cooperatively with APRA while maintaining a transparent legal structure and meeting all ownership laws. They must possess the financial strength to meet capital requirements for at least two years and have fully tested IT systems ready to accept deposits.
The business must also be led by a qualified, majority-independent board and a skilled staff that follows a strict risk management framework for all operations.
Applicants are also required to show they have the expertise to manage material risks and a clear, credible plan to recover from financial stress, at a minimum, this would include at least one guaranteed exit strategy, plausible recovery options, and be prepared to activate the Financial Claims Scheme to protect consumers if the business fails.
[Related: Bank announces closure, customers urged to transfer funds]
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