FlowBank, a Swiss online neobank, unexpectedly ceased accepting new customer applications and stopped providing client onboarding. This comes following the announcement earlier today that the bank will be filing for bankruptcy by the Swiss financial authority, FINMA.

While FlowBank's primary website is still up and running, a maintenance notice has been added to the “Open an Account” page informing users that the onboarding procedure is now not accessible. Customers who need help opening an account can get in touch with customer support.

CEO Charles-Henri Sabet founded FlowBank in 2020, with an initial emphasis on banking and investing operations. It has, however, just changed its emphasis to online CFD trading, which was akin to Sabet's prior business endeavor, London Capital Group Ltd (LCG). The cryptocurrency investment firm CoinShares owns a sizeable 30% of FlowBank's ownership.

Concerns about FlowBank's financial stability led FINMA to decide to file the bank for bankruptcy. The regulator disclosed that FlowBank may be overindebted and no longer satisfies the minimal capital criteria required for its operations. With preliminary estimates showing that FlowBank's “privileged deposits” may be completely reimbursed from the bank's available cash, this step seeks to safeguard depositors.

It's still unclear how FlowBank's insolvency would affect LCG, a subsidiary. Despite not having submitted its 2022 financial accounts—which are late by over six months—LCG is purportedly in good standing and has a separate license from the UK's Financial Conduct Authority (FCA).

The group also comprises LCG Capital Markets Limited, an offshore company based in the Bahamas, and London Capital Group (Cyprus) Ltd, a company whose CySEC license was revoked in 2021.

The demise of FlowBank is the second big blow to neobrokers in Europe in less than a year. Due to ongoing losses, Amsterdam-based BUX was sold to ABN Amro in the latter part of last year. The demise of FlowBank highlights the financial risks that may occur in the quickly changing digital banking ecosystem and adds to the expanding list of issues affecting the neobank industry.

Stakeholders and customers are waiting for more information as it develops on FlowBank's bankruptcy procedures and the implications for the neobanking sector as a whole.

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