Australian Finance Group has taken a stake in neobank Volt in a deal that will see the mortgage aggregator offer a Volt-funded digital mortgage product under a white label arrangement.
AFG announced yesterday that it will pay A$15 million for a 7.6 per cent shareholding in Volt Corporation Ltd.
The two financial institutions have agreed to a strategic alliance. In addition to the white label mortgage, AFG will have access to Volt’s digital banking services and technology platform, which will be used for AFG credit decisioning.
AFG will use Volt’s personal financial manager to develop an AFG branded PFM for AFG home loan customers and other AFG broker customers.
The two companies will work together to develop further Volt white label products for AFG brokers, including personal and business loans.
Volt’s digital banking products will be available to customers of AFG brokers.
AFG chief executive David Bailey said in a statement that products will be piloted later this year and made available to AFG brokers in the first quarter of 2022.
Bailey said the strategic alliance will help AFG compete in the digital environment and the PFM would allow it to participate in open banking.
The AFG partnership is a landmark for Volt, which moved into banking as a service last year, selecting London-based fintech Railsbank as enabler of this vision.
With $88 million in household deposits and total assets of $102 million as of the end of April 2021 on APRA data, it is no exaggeration to say Volt Bank is the smallest bank in Australia (ignoring ADIs still deeming themselves credit unions).
The big-thinking underpinning the Volt vision is being shaped (via the AFG milestone) into real-world disruption and even long-term value for the neobank.
“The demand for ‘banking as a service’ from business is quite incredible,” Steve Weston, Volt’s CEO told a panel at the Intersekt Festival in Melbourne two weeks ago.
Weston rated Westpac as Volt’s only real competitor in this domain.
AFG’s capital injection for Volt is a minor share of Volt Corporation Limited’s current capital raising of $85 million, which will bump up its capital base by around 50 per cent.