Challenger bank gains full ADI licence

The Australian Prudential Regulation Authority (APRA) has granted an Authorised Deposit-Taking Institution (ADI) licence to Volt Bank, the first such licence granted to a challenger bank this decade. The last retail bank to be given an ADI licence from APRA was Members Equity Bank, in 2001.

The neo-lender had previously been the first organisation to receive a restricted banking licence from APRA, after gaining a RADI in May 2018.

The full ADI licence enables Volt to offer its services to all Australians by removing the limit on the maximum size of deposits from a single depositor ($250,000) and on the aggregate amount of deposits it can accept ($2 million). These limits were placed on the lender while it was operating with a “restricted” banking licence.

Speaking of the news, Volt’s co-founder and CEO, Steve Weston, said: “This is a landmark day for Australian consumers.

“It marks the next stage of an exciting journey that began with a vision to introduce genuine competition to banking. We are buoyed by the overwhelming desire from people to see change and bank in a new way,” he said.

“Volt Bank is delighted to be the first bank to receive an ADI licence under the federal government’s banking innovation and competitiveness regime. This milestone is testament to the calibre of our team and the strength of our vision. We are committed to showing Australians that banking can be done in a simpler and better way.”

The CEO added that the bank aims to provide a “fundamentally different banking experience”, noting the recent financial services royal commission, which showcased “systematic failures and breaches of trust by incumbent banks”.

Mr Weston continued: “Receiving our unrestricted ADI licence is a critical milestone and has been no easy feat.

“Australians can take comfort in the robustness of APRA’s licensing process as it thoroughly examined every aspect of our business to ensure that we are prepared for the demands and challenges of running a bank. We are very pleased to have shown that, with the right team on board, it is possible to start building a bank from scratch and receive an unrestricted licence within the regulator’s two-year time frame,” Mr Weston said.

“To have received our ADI licence before any other new entrant gives Volt Bank a competitive advantage over challenger banks looking to follow in our footsteps. We also acknowledge that this is a huge responsibility, as we will set the tone for a new era of banking,” he continued.

The digital bank now has a team of more than 100 employees and recently welcomed Foxtel and News Corp CEO Peter Tonagh and former Tabcorp CIO Kim Wenn to its board of directors.

The bank also recently announced that it had become PayPal’s only Australian banking partner to date.

The bank’s mission is to “empower people and make financial services easier”, the CEO said, adding that this can be achieved by being “digital only and smartphone led” and focusing on “removing the ‘speed bumps’ too often experienced by Australians, like lengthy waiting times and excessive fees”.

He continued: “We will roll out cutting-edge technologies, embrace data and analytics, and create a highly personalised offer that can be tailored to the specific needs of individuals.” 

The bank has said it will progressively roll out a full suite of consumer deposit and lending products during 2019 and, commencing in 2020, Volt Bank also intends to offer small business banking services.

“Our onboarding experience will include features such as rapid account opening enabled by smartphone facial recognition technology and simple transfer of direct debits and other payment details from existing bank accounts to a Volt Bank transaction account. Our product offer is well progressed and we look forward to welcoming customers in the first half of 2019,” Mr Weston said.

The bank has also now unveiled its “Volt Labs”, an app-based online community that lets customers provide their insights and ideas to contribute to designing Volt Bank products and services and “a better banking system”.

Volt will also use this forum as an early-stage test market for its latest innovations.

To date, Volt has raised over $45 million in equity capital via multiple funding rounds. This includes an $8.5 million investment from Collection House Limited that was allotted on Tuesday (22 January), building on the alliance forged in November 2018 to deliver innovative and ethical financial products.

Volt’s Series C raise of $35 million in total is also said to be “well progressed” and remains open.

Mr Weston concluded: “We are extremely pleased with the level of support we have received from early-stage investors. Now that we have been granted our full licence, we will look for further strategic investors to partner with us and support our future growth.”

[Related: Mortgage veteran launches new bank]