Volt Bank strikes ‘white-labelling’, tech-sharing deal with mortgage broking giant AFG

Volt Bank hands back licence

Volt Bank has secured a $15 million investment from mortgage broking group AFG, a deal that will see the home loan specialist gain access to Volt’s ‘white label’ digital mortgage product, deposit services, and tech platform.

The “strategic alliance”, which also gives AFG a 7.6 per cent stake in Volt, will enable its brokers to access a new ‘white label’ digital mortgage product developed by the neobank.

AFG will also be able to tap into Volt’s personal finance manager (PFM) platform, which the mortgage specialist predicts will enhance engagement between its brokers and customers, support Open Banking adoption, and, crucially, fast-track loan assessments.

Currently, according to AFG data, the average wait time for home loan approval on its panel is 27 days. Volt said it could potentially slash unconditional loan approval times to just 12 minutes.

Making use of its new PFM capability, AFG said it would look to build a dedicated app for its customers, to be piloted in late 2021 alongside the Volt-funded digital mortgage product.

“The development and availability of a PFM app is an important part of ensuring our brokers have the best opportunity to participate in the benefits of Open Banking as it builds across the market in the future,” said AFG chief executive David Bailey.

“The relationship a broker holds with their customer is fundamental to their success. The provision of the new PFM app technology will enhance that connection and ensure their customers’ interests are kept front and centre,” Bailey added.

Credit decisioning through AFG Securities, AFG’s in-house lending division, will also get a boost from Volt’s extended digital banking services and technology platforms, driving, it said, “further efficiencies, [providing] another layer of risk management, and [improving] the broker and customer experience”.

As part of its banking-as-a-service offering, Volt would also make available its digital banking deposit products. This, in due course, could see AFG offer deposits to its customers that would sit on Volt’s balance sheet.

The alliance with AFG signifies a distinct preference by the neobank, at least for now, to supply its mortgage and deposit products through partners rather than through its own channels.

Volt in May announced it that would launch a fully-fledged digital mortgage offering, built in partnership with local neo-lender Australian Mortgage Marketplace.

Chief executive and co-founder of Volt, Steve Weston, noted at the time the neobank would seek to deliver its mortgage products and services through broker partners first before rolling out its own direct mortgage solution.

Commenting on the new partnership with AFG, Weston said he was keen “to facilitate a future where a range of businesses, large and small, can deepen their customer relationships by supporting financial journeys”.

There is no doubt significant value for the neobank in partnering with established players in the mortgage broking space. According to data from CoreLogic, mortgage brokers last year represented a little over 60 per cent of all home loans in Australia – the sector’s highest-ever recorded market share.

AFG is already an active user of white label services. Currently, around 10 per cent of mortgages placed by AFG’s network nearly 3,000-strong broker network are funded through two existing white-label suppliers: Advantedge, part of NAB, and Bendigo and Adelaide Bank.

The company has more than 70 lenders on its panel, and is said to be involved in one in every eleven home loans written in Australia.

AFG’s dedicated lending division, AFG Securities, has also directly funded upwards of $3 billion of loans.

Bailey said the alliance with Volt would ensure AFG Securities could harness the neobank’s “nimble banking solutions to deliver market-leading innovation and faster decisioning to our brokers and customers, accelerating the ‘time to yes’ for… customers”.

“This agreement positions AFG brokers at the forefront of change.”

“The strategic alliance will deliver value to both companies as we combine Volt’s Banking as a Service platform with AFG’s broker technology and significant distribution footprint to deliver competitive products and streamlined digital solutions for brokers and their customers.

“We look forward to working with the team at Volt to combine our technology with the digital tools Volt has built to enable our brokers to continue to provide the personalised service the channel’s success is built upon, and to equip our brokers to succeed in an increasingly competitive digital environment.”

Weston said he the neobank was “thrilled to partner with AFG”, bringing its digital mortgage offering to the market at scale.

“Their endorsement of Volt’s digital offering through this partnership and equity investment is a landmark moment for our company.

“Volt has distinguished itself by pursuing a Banking as a Service model, and the partnership with AFG is testament to demand for integrated and white label banking to improve customer relationships.”

Volt earlier this year entered into a partnership with the UK-founded Railsbank, known as ‘Railspay’ in Australia.

Through the partnership, Railsbank will similarly leverage Volt’s BaaS platform and infrastructure to deliver products, including bank accounts, cards, and payment solutions to Australian customers, progressing its ambitious Asia Pacific expansion.