in1Bank to ‘hand back licence’: What happens to your money then?
The digital bank is ceasing operations and handing back customer deposits.
Digital bank in1Bank has announced its closure, encouraging all users to move their funds elsewhere.
This isn't entirely uncommon. Over the last several years, neobanks in particular have entered the market only to leave again a couple of years later. The banking industry is full of well-established banks and it's hard for new competition to enter.
Although it does happen, it can still make people nervous to think about. Whether you're just using a transaction account or you've borrowed hundreds of thousands of dollars in a home loan, you'd want to know you're financially safe.
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What happens if my bank closes down?
All banks have licensing conditions which mean funds in a bank account up to $250,000 are protected by the government. In terms of deposits (that's the money you have in a transaction or savings account) that money will be returned to you.
With a home loan, this is usually sold on to another lender. You wouldn't be suddenly expected to repay the loan just because the lender has ended operations.
What do in1bank customers need to do?
Customers of in1Bank can still access their funds. These funds can be manually transferred to another account, or they'll automatically be transferred to the alternative account listed in the customers' accounts.
in1Bank is warning that if customers don't do this before the 5th of February, they'll lose access to their funds.
For in1Bank home loan customers, they'll receive information about their new repayment arrangements over the coming days. Customers with an offset account attached to their home loan will be able to move those funds into the loan itself or transfer the money to another transaction account.
Should I worry about a lender going bust?
Even if a lender ceases operations because it's run out of money, your funds and financial situation are safe.
The biggest thing to worry about with a bank going bust is the potential inconvenience of having to find a new banking provider. With loan products most of the hard work is done for you, but you may be moved to a lender you wouldn't have otherwise chosen.
You can read more about what happens when a lender goes bust in our guide here.
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