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Neobank Volt raises $70 million to target the ‘digitally comfortable’

Co-founder and chief executive Steve Weston said more than half of the funding will be used to support Volt’s regulatory capital requirements.

“Until we had product in the market we could not justify an increase in share price and valuation,” he said.

Research shows if people are comfortable using a smartphone or an Ipad they are potentially customers.

Steve Weston

The neobank, which has no branches, started launching to the 45,000 people on its waiting list and will open its products to the general public in February.

Volt’s savings account pays 2.15 per cent interest as ongoing rather than introductory rate with no deposit conditions.

“Most importantly it is one of the few savings accounts you see in Australia where what you see is what you get,” said Mr Weston. “By this time next year it could be that all introductory rates on all savings accounts are abolished.”

Volt chief executive Steve Weston said Volt's customers are the "digitally comfortable".

Volt chief executive Steve Weston said Volt’s customers are the “digitally comfortable”.

Volt plans to launch a cash management account in February, transaction account in May and personal loans in June but its offerings will not include a credit card.

“I think I would have a walk out of the good chunks of the staff if we introduced a credit card they are evangelical about the evils of credit cards,” Mr Weston said. “I think Volt can lead the way and see the industry change. Just to offer a fundamentally better customer experience not just in terms of interest rates but to help customers live better financial lives.”

Mr Weston said Volt will use data analytics to look at customer spending and help customers compare different bills and provide discounts at retailers.

“The neobanks are saying: ‘The only way we will flourish is to help customers in a way traditional banks haven’t’,” he said.

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Mr Weston said Volt’s typical customer was “digitally comfortable”.

“Initially we are finding the younger generation, the Millennials are more likely to switch, but research shows if people are comfortable using a smartphone or an ipad they are potentially customers,” he said. “Retirees are sick of seeing interest rates fall, naturally they will say ‘It looks like the offer is good is my money safe?’ and we have the $250,000 government-backed guarantee.”

Volt has just under 300 investors, including its management team, high net worth individuals and strategic investors including “one large Australian funds manager” which wants to remain confidential.

“We are now of the size that we are of interest to super funds and sovereign wealth funds,” Mr Weston said.

The bank will now look to raise a further $50 million in funding with the focus on investors in the United Kingdom and the Middle East.

“We are a little bank and may not become the fifth biggest bank in Australia overnight but I think we have a real opportunity to change the behaviour of the big banks.”

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