Volt Bank's Rise and Fall in the Australian Banking Industry

Volt Bank was a digital bank that made waves in the Australian banking industry with its innovative approach. It was founded in 2017 by Steve Weston.

The bank's initial success can be attributed to its ability to disrupt traditional banking practices. It offered a range of financial products and services, including home loans, credit cards, and savings accounts.

Volt Bank's digital platform allowed customers to manage their finances online, making it a convenient option for those looking for a more modern banking experience. The bank's mobile app was user-friendly and accessible on both iOS and Android devices.

Despite its initial success, Volt Bank struggled to gain traction in the Australian market.

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Volt Bank was issued with a RADI licence on 7 May 2018, becoming the first completely new institution to be licensed as a retail bank in the Australian market since Australian Bank in February 1981.

This was a significant milestone, marking the first time a new bank had been licensed in Australia in over 40 years.

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Volt Bank was the first organisation to obtain a RADI licence under the new licensing framework created by the banking regulator, APRA.

The RADI licence was designed to encourage new entrants and competition to the existing banking system.

On 29 June 2022, Volt announced its intention to cease its deposit-taking business and return its banking licence, becoming the second neo bank to do so after Xinja.

Accounts held with Volt will be closed on 5 July 2022.

Here are some key dates in Volt Bank's history:

Volt Bank's challenges and failures were largely due to bad timing. The company's plans were derailed by the pandemic in 2020, which froze consumer activity and delayed their ability to roll out their lending business.

Their financial roadmap was heavily dependent on reaching this stage sooner rather than later, as their deposit accounts were meant to be a loss leader while they scaled their user numbers. This meant they had to burn more capital during the pandemic than they would've liked to.

The Australian government's zero-covid policy was a significant factor in this delay, effectively freezing consumer activity for almost two years.

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Bad timing can be a major setback for any business, and Volt's story is a perfect example of this. The company originated in 2018 when the Australian Prudential Regulation Authority created a new banking licence to encourage innovation.

Volt was the first of four new entities to get a banking licence in decades, and it entered the market in 2019. Over 40,000 early-access users were onboarded at launch, which was a promising start.

The pandemic hit in March 2020, and it flipped retail banking on its head. The Australian government's zero-covid policy effectively froze almost all consumer activity for the better part of two years.

This delay was a major problem for Volt, as its financial roadmap depended on getting to the stage of issuing loans and mortgages sooner rather than later.

Digital banking on the retail level is notoriously hard to crack, with consumers generally sticking with their established banks.

Startups underestimate the marketing costs of getting depositors, even if they focus on a specific niche. This can lead to significant financial challenges.

Consumers are notoriously loyal to their banks, making it difficult for neobanks to gain traction.

The poor reputation of digital banking can also make it harder for neobanks to attract customers.

A key challenge for neobanks is generating revenue, as they often struggle to move customers to the lucrative lending phase.

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Volt Bank is a digital bank that allows users to manage their finances through a mobile app.

Their research and development process is heavily focused on using data and analytics to improve customer experiences.

Volt Bank's research team collects and analyzes vast amounts of customer data to identify trends and areas for improvement.

This approach enables the bank to stay agile and adapt quickly to changing customer needs.

Volt Bank's mobile app is designed with simplicity and ease of use in mind, making it accessible to a wide range of customers.

The app's user-friendly interface allows customers to easily navigate and manage their accounts.

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