Why this digital bank is backing brokers

Speaking to Mortgage Business director Alex Whitlock for the Mortgage & Finance Leader podcast, Volt Bank founder and CEO Steve Weston outlined the journey of the bank, from becoming the first neo-lender in Australia to be given a restricted authorised deposit-taking institution (RADI) licence (which involved “a great team, a little bit of luck and a lot of hard work work”) to gaining its full licence, and its plans to disrupt the banking landscape both now and into the future. 

While the digital bank is currently still in beta testing to the general public (Volt Bank currently has a savings account in operation, with waitlist to new customers), it has been accelerating its growth in recent months.

The bank has recently been expanding its banking-as-a-service platform and preparing for the launch of its mortgage product by acquiring neo-lender Australian Mortgage (AM) and its distribution alliance with Australian Finance Group (AFG) brokers.

The mortgage products will primarily be funded through deposits and warehouse funds.

A pilot of the mortgage product is expected “in the last quarter of 2021”, before being made available to all of AFG’s brokers in early 2022. 

Mr Weston told the Mortgage & Finance Leader podcast: “No matter where I have worked… I [highlighted] the value proposition of the broker…

“You can see them kinda 24/7 (branches you can only see in business hours and the like, and you [only] have the best of the individual bank’s products, as opposed to a view of the whole marketplace) and they have the best product for the customer, and even things like after-sale service… quite often, you go back to a bank branch and the person who really looked after you well has gone/been promoted/moved on – but when you’re dealing with a broker, unless they’ve sold their business, you’ve got that continuity.”

He continued: “Everyone recognise[s] that brokers are offering a superior offering than a bank branch.

“In Volt digital bank... we’ve just announced a strategic alliance with AFG. Yeah, you could go direct, but if you’re truly what customers want and need, and are building for that, the broker proposition is so strong. And that is certainly what we have done. 

“We are respecting customer choice, and our product – our offering – has got to stand on its own two feet.”

Mr Weston later noted that while many of the neo-lenders are distributing their mortgages direct to consumer, he said: “I think more and more we will see customers move toward brokers – like we’ve seen in the UK. We’re at 60 per cent here now, and that will increase.”

He concluded: “Volt can bring more competition to the table. Why is it that a start-up like Volt can work with brokers and offer such a better turnaround time, whereas the big guys, with big pockets, should be able to do it, and they can’t?”

While acknowledging that the mortgage product is yet to launch, he outlined his vision for the home loan offering – and the bank more broadly.

“I like to describe what we have built but not yet launched to the public... [as] a car that is really innovative and highly differentiated. It sits in our Volt garage and we take it for a spin around the local streets each day (and that is what we’re doing now). But suddenly we’re going to take it on to the motorways and we expect to scale up reasonably quickly.

“With each of the products that we bring to market, you will see this differentiation... and you’ll see that with mortgage turnaround times.

“There is a real social motivation for Volt, and that is to show that banking can be better for all stakeholders – whether it be mortgage brokers, customers, regulators, shareholders – and it is not just that it can be done better, it needs to be done better. And that is what we aim to do with Volt… as well as having a bit of fun on the journey as well.”