Volt charges for neobank relevance

Ian Rogers

A sedate ramp up of its balance sheet and a pacier roll out of services to ambitious fintech partners with a belief in white-labelling banking product are factors shaping Volt Bank’s viability in Australian banking.

A bank with minimal revenues in FY2021 is looking to partnerships, headlined by BTC Markets, Australian Finance Group and Parpera to stem its burn rate and convince the many tyre kickers to sign on.

“We have a big opportunity with open banking and ‘banking as a service’,” Steve Weston, Volt Bank’s ever confident chief executive told Banking Day.

“Everyone wants their own [banking] app now; to white-label,” he said.

Flying under the radar, Volt’s 2021 annual report explains one lesser known pivot in the bank’s strategy this year.

In June 2021, the group “decided to discontinue its Volt direct banking app and consolidate the app with Volt’s partner banking app that is offered to the customers of Volt’s business partners.

“This will result in the development of a Volt branded version of the partner banking app that will be offered to Volt’s direct customers.”

The design and development of the Volt-branded app was “outsourced under a licence agreement to Frollo Australia Pty Ltd,” the annual report discloses.

Volt’s flexibility, to put it one way, while it migrates to a niftier app means the bank’s households deposits (A$82 million at the end of August) remain trivial, while thousands remain in ‘waitlist mode’ for access to transaction banking and savings product.

An equally pressing good news story on the asset side of the balance sheet looks dependent, for now, on the recently struck strategic alliance with AFG (also now a minority shareholder) and any benefits building from Volt’s acquisition, three months ago of fintech Australian Mortgage.

Housing loans for Volt, on the most recent APRA stats, were all of $4 million.

Still, Weston said: “We will be predominantly a NIM shop.”

One footnote from the Volt Corporation 2021 annual report is that is spells out terms for takeover of Australian Mortgage.

Volt and AM agreed on “consideration for the acquisition” of $12.7 million, plus a potential further earn-out of $1.7 million, subject to performance conditions being achieved by September 2022.

Volt has raised around $180 million in capital to date, with $108 million in accumulated losses at the March balance date.