Monoova CEO Christian Wigstrom
Volt Bank clients - fintechs and others – are this morning scrambling to identify and engage with alternative suppliers of a banking-as-a-service offering, and minimise damage to their own businesses.
On Wednesday morning, Volt shocked the banking and fintech world, and devastated their BaaS clients, with the announcement that they would surrender the Volt Bank licence to APRA next week, and thus withdraw their increasingly in-demand BaaS suite – including deposit products – effective immediately.
Volt had five BaaS clients in production and another half dozen ready to on-board. The number of prospects in the pipeline is unknown, but likely to be plenty.
For clients such as money-management platform Parpera, which was reselling deposit and card payments product to sole traders and very small businesses, the sudden cancellation is compromising for a fintech emerging from its start-up phase.
Parpera founder and chief executive Daniel Cannizzaro told its 500-plus client list that the closure of Volt’s deposit-taking business “directly impacts Parpera’s ability to provide its members with access to banking, payments, and cards services and requires Parpera to cease onboarding any new members immediately and providing its services to members by 5 July 2022.
“We will also need to cease access to the Parpera Business Debit Mastercard.”
Australian Finance Group, which is both a client and shareholder of Volt, yesterday said: “The white label arrangement with Volt was in pilot mode and will not proceed.
“We will continue to look at opportunities to further grow the white label program part of our business, including the launch this week of a new ThinkTank white label residential product, Align.”
Who might the likes of Parpera been talking to yesterday, or plan to today?
There is little depth in the banking-as-a-service domain in Australia, and Volt’s frustrated clients have only days to agree and on-board with a new provider, and roll it out to their own clients – lest their SME clients make other arrangements by next weekend.
BAAS is, nominally, a (recent) strength of Westpac, but there are doubts the bank is eager to serve small fry and its systems may be too clunky. (The bank counts heavyweights such as Afterpay and SocietyOne as clients).
CommBank? Maybe, but the fintech set by and large plan to profit from attacking the market share of the biggest banks.
Regional Australia Bank is on the cusp of bringing a BAAS offering into production, but it will not be in market in time to provide another option to the likes of Parpera.
The drastically short notice imposed on clients by Volt has some asking: why not a few weeks longer?
The reason may well be that this is a function of APRA’s inflexible requirements, rather than any resolve of the Volt board for a hard stop.
One fintech that may be about to prosper from the Volt Bank exit is business payment solutions provider, Monoova.
Christian Wigstrom, the Monoova CEO, told Banking Day the firm was assisting more than half a dozen prospective clients, formerly with Volt, to swiftly arrange substitute services.
“We said: ‘we could do it immediately,’” Wigstrom said, though he did not mean this literally.
“We do need normal on-boarding. We don’t need to launch product.
“Some things we can’t do that Volt could do, since they were an ADI.”
Its proprietary platform allows businesses to access a variety of wholesale payments functions including the NPP, direct entry and real-time gross settlements.
Monoova has a client list in the “low 100s” and says it has handled more than A$50 billion in payments volume since launching five years ago, almost half of that in the last year.