A new digital bank called volt bank is set to launch in Australia after securing a new kind of operating licence from the prudential regulator.
volt bank, which said it has raised a modest $15.7 million in equity to date, was today handed a restricted authorised deposit-taking institution (RADI) licence by the Australian Prudential Regulation Authority (APRA).
The new licence type was only launched on Friday last week.
It is designed to allow new entrants “to conduct a limited range of business activities for two years while they build their capabilities and resources”, APRA said.
Digital banks - whether they are launched by an incumbent or another company outside of finance, such as the technology sector - are anticipated to be the main applicants for the new license type.
volt bank said in a statement that its arrival will represent the “first new retail-focused bank licensed since the early 2000s”.
“With no legacy systems and no branch infrastructure, we are starting from scratch and building a bank the way it should be,” volt bank CEO Steve Weston said.
“We acknowledge we are at the start of our journey, but the trust between many Australians and their banks has been broken and the path to repair starts with new market entrants who are willing to do things differently.”
Weston promised that volt would disrupt the way traditional banks operated, and said that “every experience will be mobile-led and customer-focused”.
He said that customers would be able to open accounts using “smartphone facial recognition technology”, and that low fees would be “enabled by [the bank’s] low cost, digital only structure”.
The start-up also plans to use data analytics as part of the way customers’ use their accounts.
“On an opt-in basis, volt bank will show customers if they can save money on monthly expenses such as utilities or insurance and monitor daily spending to help customers stay within their budgets,” Weston said.
Subject to volt bank transitioning to a full ADI licence, volt will enter the market by offering “saving accounts, transaction accounts, term deposits and foreign exchange”.
“This will be followed by personal loans, mortgages, credit cards and in the longer term, small business banking products,” Weston said.
volt bank currently employs around 35 people.