Australians will finally be able to fully access a new wave of digital banking competitors called neobanks, as the first-ever unrestricted banking licence was issued to Volt on Tuesday.
While several neobanks have been operating here on a restricted basis since last year, the Australian Prudential Regulation Authority’s (APRA) decision to issue a full license to one is a watershed moment.
It comes just weeks before Commissioner Kenneth Hayne is due to hand down his final report detailing the bad behaviour of Australia’s brick and mortar banks.
“That stuff needs to go out of the market and it’s not going to happen by itself unless you have proper competition,” CEO Steve Weston told Your Money Live. “A bank like Volt will not only bring pricing competition, it will bring fundamental change to what a customer can expect from a bank.”
The unprecedented approval means Volt can now offer a full suite of banking services to all Australians, making it a genuine competitor.
“It’s a fundamentally different experience. To open an account you take a photo of your passport or drivers license and take a selfie,” Weston explained.
In order to really challenge the dominant share of Australia’s big four, Weston- a former NAB general manager- said neobanks will also be able to facilitate the transfer of customers like never before.
“[We] will allow you to instantly transfer those direct debit and bill payments over to Volt Bank,” Weston said.
Likewise, it’ll make it easier to move products you might already have with disparate banks like home loans, transaction accounts and credit cards.
“You’ll be able to see all of those on the Volt app, we’ll show you the rates that you’re getting through those particular providers compared to what you’d get with Volt.”
Digital banks claim that their saving on physical branches and antiquated technology platforms ensures they can pass on competitive rates to customers.
Accordingly, Volt will be hoping it can emulate the success of neobanks overseas.
The UK’s Monzo and France’s Revoult, for example, have exploded and now both boast more than one million customers apiece.
While it remains to be seen whether digital banks will claim a similar chunk of the market in Australia, it’s a historic moment nonetheless, with the last banking license granted to a new business thought to be to Australia Bank in February 1981.
“I met up with the former CEO of the Australia Bank who’s now in his 80s and he told me very fondly that they believed they were the first new start-up in Australia, apart from a mutual, in 70 years,” Weston said.
“If that timeline holds true, today we are the second start-up to get a banking license in 100 years.”
Watch the full interview above.