As Volt Bank begins the task of onboarding its 40,000-strong waitlist, CEO Steve Weston is banking on breaking tradition and lessons from abroad to spark the neobank into life.
With the year winding down and a new decade edging nearer, it’s perhaps fitting that a new cohort of banking players are beginning to make their mark on the Australian banking scene, bringing with them a shift in style and substance which is only likely to grow further in 2020.
Of course, the neobanks and digital banking are not foreign concepts, but 2019 is likely to have been the year in which digital players really entered the public consciousness in Australia for the first time.
Among the foremost members of this emerging scene, and perhaps the player with the most name recognition, is Sydney-based Volt Bank.
Volt was the first Australian neobank to obtain an RADI licence from APRA in May 2018 - making it the first completely new banking institution to be licenced in almost 40 years - followed by a full banking licence in January 2019.
And for Volt, that journey from an idea, to a licenced bank, to a fully operational neobank open to the public is almost complete.
Last week Volt released a key piece of information that not only showed how close it is to a full launch, but also to its competitive intentions in the market.
Volt will be offering a ‘no strings attached’ savings account rate of 2.15% with its Volt Save - a rate which currently places it well ahead of any comparable account in the Mozo database and on a par with the highest ongoing rates around.
At the moment the account is only available to Volt’s early adopters, but in another big statement released earlier this week, Volt announced that it is beginning the process of onboarding the 40,000 Australians on its waiting list.
Volt expects that process to be complete in February 2020, at which point it will open its doors to the public.
So with the wheels very much in motion, Volt Bank CEO, Steve Weston, sat down with Mozo to share some of his thoughts on the Volt journey so far and talk about the road ahead.
Launching Volt and lessons from abroad
It’s not every day that the idea of starting your own bank turns from concept to reality.
But having begun his career in banking at 15 years old and already enjoyed stints at the Commonwealth Bank, St.George, NAB and a recent spell in the UK with Barclays, Steve Weston’s experience put him in a position where that idea wasn’t quite so farfetched.
“My experiences, and in particular the learnings from my time in the UK, made it clear to me that banking could be done in a much better way, for all stakeholders. Then in May 2017, the Australian government changed the rules to make it possible for a start-up to get a banking licence.”
“At that time I remember thinking, “if not now, when? and if not you, then who?” Within a couple of weeks of the government’s announcement, we had a team of 12 undertaking a feasibility study to determine if it was viable to start a digital bank in Australia. And the rest, as they say, is history.”
Weston’s experience abroad could not, perhaps, have come at a better time given that it coincided with the emergence of a group of ‘challenger banks’ on the UK market including the likes of Atom Bank, Starling Bank, N26 and Monzo.
Since the start of the decade these digital banks have carved out a meaningful share of the market, skewed predominantly towards younger customers, and in doing so have created a roadmap of sorts for their Australian counterparts.
Not only has Weston been happy to learn from the lessons of the UK market, he’s brought some of that international experience to Volt.
Image: Volt Bank CEO, Steve Weston
“Australia can absolutely gain some great insights from the UK, where the market is bigger and further advanced, but also very similar in construct to Australia.”
“Digital banks in both the UK and Europe are going absolutely gangbusters, and to leverage this, we will soon announce the appointment of a key executive at a UK digital bank as an advisor to Volt.”
According to Weston, there’s a real opportunity for Australia’s neobanks to replicate the success of the ‘challengers’ in the UK by tapping into the country’s own millennial banking customers - a demographic that’s only likely to increase in financial power in coming years.
“Research by RFi Group shows that millennials - who are predicted to be the largest revenue earners for banks by 2025 - are 3 times more likely than other adults to use a fintech or neobank. Sixty eight per cent of all millennials and 76 per cent of 34-year-olds were also multi-banked in 2018, creating a large opportunity for digital challenger banks in Australia.”
“However, these overseas digital challenger banks are now moving even beyond their predominantly millennial customer base, and becoming the main bank for a far broader demographic and number of customers.”
Building trust, breaking with tradition
In many ways, Australia’s neobanks couldn’t have picked a better time to come to the fore.
While 2019 might be remembered in banking as the year the neobanks emerged, it will also certainly be remembered as a year of fallout from the Banking Royal Commission which, on top of numerous other scandals, put a serious dent in the reputation of Australia’s major banks.
According to research by the Australian Banking Association released in 2017, just 31% of respondents reported a strong level of trust in the Australian banking industry, and that figure is hardly likely to have improved in the interim.
“Clearly, banks, and in particular the major banks, have lost the trust of the communities they serve,” says Weston.
“Volt may be new, but we have been working extremely hard from day one to show that it’s possible for a bank to genuinely put customers’ interests at the heart of decision making - not just talk about it.”
Trust may come in time, but first Volt will need to earn it.
In the meantime the neobank is working on appealing to Australian customers by differentiating itself from the norm, starting with the first account off the conveyor belt, Volt Save.
“We have similarities to other banks in that we will offer traditional banking products. However, the way our products are being designed to help customers is anything but traditional.”
“The traditional bank model is to sell a product and cross-sell other products based on likelihood to take up, rather than need. At Volt, on the other hand, we’re progressively building all the steps that it takes for customers to achieve outcomes to help them be better off.”
“Our first product, Volt Save, does just that. Not only does it offer a competitive interest rate that is void of the usual conditions or introductory periods that most banks apply, but it actually helps customers develop good saving habits.”
Like other digital banks, harnessing the power of data to actively encourage and facilitate a positive shift in customer behaviour and habits is going to be a key selling point.
But Volt’s plan is to go beyond banking. Instead, Weston says, it will be looking to provide the insights for a customer to reflect on and improve their entire financial life.
“The traditional model is that banks provide customers with a deposit account or lending product, and then leave them to their own devices. However, what many customers want is personalised guidance and practical tools that will help them achieve their financial goals. This is where Volt is really unique.”
“As we launch our card, we’ll use the transaction data to surface insights and help them spend more wisely, and use intelligence to help them make better decisions. We will identify where customers can get better deals on their bank accounts, utilities and phone plans and help them to manage their money better by predicting their bills.”
So will Volt Bank’s innovative approach provide the spark to light a new path forward in Australian banking in the new decade? Time will tell, especially for a bank that is only just starting to take on its first customers.
For more information about Volt make sure you check out our Volt Bank Review, or compare the Volt Save interest rate with some of the other hot savings account offers on the market in the table below.
*Bonus interest 1.20% only applies when you deposit $2,000 into your Go Account and make 5 debit card purchases, direct debit or BPAY payments in the previous month. If you are between 18 and 25 you need to deposit $1,000 and fulfil the other criteria.