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Neobank Volt to ramp up ‘banking as a service’

Volt Bank is betting fintechs, retailers, and real estate agents will be keen to offer banking services to their customers, using the neobank’s banking license and infrastructure.

The digital bank on Wednesday unveiled the next leg of its strategy, saying it would accelerate plans to offer “banking as a service” to corporate clients that were looking to deepen relationships with customers.

Volt chief executive Steve Weston

Volt chief executive Steve WestonCredit:Christopher Pearce

Banking as a service, also offered by Westpac, is when a bank allows a non-banking business to offer banking products such as transaction accounts under their own brand, but using the bank’s licence and infrastructure.

Volt, which flagged a move into banking as a service last year, has now formed a partnership with UK business Railsbank, to be known as Railspay in Australia due to restrictions on use of the word “bank.”

Volt hopes the partnership will drive up its deposit growth in the months ahead, as it also launches mortgages.

Amid scepticism in some quarters about the neobank business model, Volt chief executive Steve Weston said the partnership would allow Volt to gain scale much more quickly than if it had tried to expand its deposit book by acquiring customers directly.

“The demand for neobanking is strong, but our model is fundamentally different. It is banking as a service for the lion’s share our business. That is the growth area that you’re seeing in banking globally and Australia is going to go down that path as well,” Mr Weston said.

Railsbank chief operating officer for Asia Pacific Justin Xiao said the business could act as a “bridge” for fintechs from overseas looking to launch in the Australian market. He said clients of the company overseas had included Singaporean insurer Singlife, which offered deposit accounts with its policies, and UK business Wagestream, which allowed employees to access overtime pay early.

Mr Xiao said real estate agents could also potentially use the service, which would allow them to provide bank accounts and offer loans to tenants.

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