It is just one of several neobanks seeking to take some of the major banks' A$30 billion in annual profits, with Xinja and the strangely-named 86 400 also aiming to get full licences.
Unburdened with expensive networks of physical branches and jumbled legacy IT systems dating back decades, the neobanks will be nimble enough to offer a range of innovative services to a new generation of customers who are comfortable managing their finances via their cellphones.
In particular, they plan to leverage data. In the middle of this year, Australia's open banking regime will come into effect – and this will force banks to share individual customer data with those customers. More importantly, those customers will in turn be choose to share their transaction, loan and account data with other business, such as the banks' competitors.
Thus Volt bank plans to analyse consumers' data from other banks (with the consumers' permission) to see if they can offer a lower loan interest rate, a higher deposit rate or a better deal on their credit card. It will also use data to review customers' gas, electricity, phone bills and so on to see if they can get a better deal elsewhere.
Co-founder and chief executive Steve Weston believes Volt will change the banking in Australia.
Rather than focusing on selling products, banks of the future will use of data analytics to get a full picture of what customers have going on in their lives and provide tools and support to help their get to where they want to get there in the most effective way, he says.
Take saving for a goal, for instance. Weston says there are 12 steps in the process and a traditional bank will only do two – keeping the money safe and paying interest. Banks of the future will help with the other steps as well – setting a goal; setting a budget; keeping the budget on track with real-time prompting; and using open banking to offer better deposit rates than competitors.
The rise of the neobank is driven by two factors.
First, in a bid to boost competition in the banking sector, the government has lowered the barriers to new start-up banks in recent years.
A 2017 rule change allows start-ups to obtain an initial "restricted" banking licence, allowing them to test their products and systems before they move to take full licence. Importantly, the prudential regulator has also removed a requirement that banks must have at least $50 million in shareholder capital.
Secondly, there is the massive drop in technology costs arising from cloud computing and software-as-a-service, which has slashed the cost of entering a tech-heavy sector like banking.
The neobanks are hoping their nimble tech-led offerings and sharper pricing and the customer disenchantment with the major banks in the wake of the banking royal commission will help them win customer share.
Weighing against this, however, is the fact that while many customers don't particularly like the major banks, they are confident their deposits will be kept safe. The fear of the neobanks' security might be irrational, as Volt has the same government-backed deposit insurance as the majors, but the fact is a lot of people are still happier with a bank with a network of physical branches, even if they never go in them.
Secondly, all of the technology the neobanks will be using to roll out new offerings is also available to the majors. They might not be as quick as their smaller competitors to roll it out, but they won't wait too long before giving their customers the benefits. And given the tens and even hundreds of millions of dollars the big banks are spending on start-up incubators and innovation labs, sometimes they'll beat the neobanks to market.
Even if the neobanks don't ultimately take much market share, the major banks will have seen what happens to old economy businesses which don't respond when competitors offering a better experience re-set customer expectations.
Ultimately we should all be better off.
