APRA grants first local digital licence to volt bank

The prudential regulator has signed off on Australia’s first-ever digital bank under a restricted licensing regime that aims to bolster industry competition.

The Australian Financial Review revealed that Sydney-based volt bank had been granted a licence by the Australian Prudential Regulation Authority early on Monday.

APRA later confirmed that volt bank was authorised as a restricted authorised deposit-taking institution (RADI), while non-operating holding company volt Corporation Limited was also approved under the Banking Act 1959.

Volt bank is led by former Barclays and National Australia Bank executive Steve Weston which he co-founded with former colleague Luke Bunbury. To date, volt has raised $15.7 million in equity capital via three funding rounds.

The license comes amid a race between local firms to get first mover advantage in the digital bank space, which is well established in other markets including the United Kingdom. Digital or neobanks, as they are referred to, are typically fintech companies focussing on mobile and digital banking without the costs of traditional branches.

They do confront a string of challenges, however, as they attempt to chip away at the market share of the large banks, who have also upped their game in technology-led banking.

Rival local startup Xinja has also been working towards a restricted licence. Its website claims it is “building the first, Australian, 100 per cent digital bank” designed for mobile.

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Source: APRA grants first local digital licence to volt bank | afr.com