Steve Weston believes he will change banking with his start-up Volt Bank.

 
“We’ll be at the forefront of changing the way that banking has been done,” says Weston, co-founder of Volt, which in January became the first retail challenger bank to receive an Authorised Deposit-Taking Institution (ADI) licence since the early 2000s.
 
“Banking will be a different experience than what we are used to today. It will be seamless. It will be quick. It will be intuitive.”
 
He sets out what retail customers can expect when the bank launches to the public in early 2019: “You’ll be able to open an account in about 60 seconds using biometric ID, we’ll then verify your identity from the government agency system, and that immediately starts solving the customer's pain points.”
 
Volt will help customers transfer all of their direct debits and payment records to the new institution, by logging into their existing bank account and clicking on those direct debits they wish to keep.
 
And, recognising that many people bank and have credit cards with multiple institutions, the bank will provide a consolidated view of all the customer’s accounts in the one location.
 
It will also use the capabilities of the open banking regime – which forces banks to share individual customer data with the customers – to offer customers a better deal.
 
“Most importantly, we’ll show you things like your deposit interest rates compared to what Volt is going to offer,” says Weston, previously an executive with Barclays Bank in the UK.
 
“In time, we will say to customers, ‘With your consent, we’ll review your regular bills – gas, electricity, telcos, and the like. If we think we can find you a better deal, we’ll let you know, and you choose whether you take that up. We’ll arrange a discount for you at retailers across Australia’.”
 
Customers will elect to have the proceeds of the discount go back to their transaction account, into their mortgage or to their favourite charity.
 
 “All of those things are absolutely doable using the modern technology. That’s what we’ll look to leverage,” Weston says.
 
“A lot of it is not just about banking. It’s showing customers where they can get a better deal on a whole range of things that they spend money on – becoming quite a platform in that space.”
 
Weston says the idea for the bank came on Budget night in May 2017 when the Federal Government announced the open banking regime and the introduction of restricted banking licences.
 
The next morning he had coffee with co-founder Luke Bunbury, a former bank executive with several start-ups to his name, and the pair decided to launch a six week feasibility study. Digital bank start-up Xinja is also planning to make use of the restricted licence regime.
 

Partnering to offer banking products

There were also a couple of other factors which made it an ideal time to launch a new bank.

“One is consumer behaviour is changing. We’re banking less in branches, more on smartphones,” he says. “Technology has improved, even in the last few years, in leaps and bounds in terms of capability. At the same time, cloud capability and the cost of that technology is now significantly lower and are much more scalable.”
 
While Volt was the first Australian bank to win a restricted banking licence in May last year, Weston decided to wait until it had a full licence, which was granted in January 2019.
 
The bank will work with advocates to co-create and test banking solutions, “and then rolling them out only when we are satisfied that they will create a ‘wow’ factor,” Weston says.
 
A second part of the business is to partner with other companies which want to “deepen” their relationships with customers by offering banking products. It has signed a deal with PayPal that will allow customers to sign up to a Volt account using their existing PayPal data.
 
Volt Bank will also offer its budgeting apps to the half a million Collection House customers in financial difficulty.
 
Weston says financial wellbeing will be an important focus of the bank and unlike traditional banks, Volt won’t focus on products when trying to help customers achieve their goals.
 
“Banks of the future will understand – via the use of data analytics – what customers have going on in their lives and they’ll bring the full range of tools, support, and education to the customers to maximize their chances of successfully achieving that outcome or getting to the outcome in the most effective way."
 
That could be with budgeting, real-time nudges and prompting, bank product or products manufactured by others like FinTechs.
 
For instance, Weston says that when a customer wants to save for a particular goal, there are 12 steps in the process but a traditional bank will only perform 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; as well as using open banking to offer better deposit rates than competitors.
 
Australia’s major banks are also working to bring innovative digital products to their customers, investing large amounts in innovation and research & development.
 

Retail first, then SMEs

Volt Bank will initially launch to retail customers before expanding into the small and medium business segment in 2020. Weston expects the majority of customers to be millennials, but older customers will have larger loans and deposits. A key focus will be refinancing existing homeowners’ loans, using open data to offer them a better deal.
 
Weston hopes to grow the bank on the back of customer advocacy in the same way that overseas start-up banks have done.
 
The bank raised $30 million from investors last year and at the start of 2019 is raising another $35 million.
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