The challenger bank has shed light on its plans in the mortgage market, with the new entrant preparing to launch its credit products in 2020.
Earlier this week, Volt Bank announced that it has begun the process of onboarding some of the 40,000 people on the waitlist for its first product rollout, a “no catches” savings account.
The Volt savings product is due for public launch after the onboarding process is completed in early 2020.
According to the bank, the savings account will not be subject to an introductory rate period or require a minimum monthly deposit or minimum amount of card transactions in order for customers to receive the highest applicable savings rate. It is expected to have an ongoing base rate of 2.15 per cent.
Speaking to The Adviser, co-founder and CEO Steve Weston said that, in launching its savings product, Volt aims to “lead by example” and reform banking practices in Australia.
“Banks, when they talk about putting the customer at the heart at what they do and looking after their best interests, they should act that out and not just talk about it, and one way to do that is to get rid of the introductory rates and the conditional rates,” he said.
“If you know full well that a high percentage of customers aren’t consistently getting the best rate, don’t do it.
“Whilst we’re a little bank, we hope that the other banks will follow us in time.”
Mr Weston added that Volt would look to “drive the same sort of transparency” in its home lending business, with the bank planning to launch its first suite of personal loans and mortgage products in the middle of next year.
The Volt CEO told The Adviser that the bank’s initial mortgage offering will target owner-occupier refinancers with low loan-to-value ratios before broadening its offering once its capabilities are tested.
Volt’s home loan products will be funded by both deposits and warehouse facilities.
When asked how Volt plans to distribute its credit products, Mr Weston reiterated that it would initially be offered exclusively via the broker channel.
“We will have a direct origination capability in time, but it’s still not easy to take a home loan out with a mobile phone, there’s a lot of data there,” he noted.
Mr Weston highlighted the utility of the “compelling” third-party channel, adding that he believes brokers would deliver greater choice for consumers.
“If you genuinely respect customers, you will let them choose the channel in which they deal with you, and we think mortgage brokers have such a strong proposition that we should be dealing with,” he said.
The Volt CEO revealed that the bank is currently in negotiations with “a number of aggregators and mortgage broking groups” to establish its third-party distribution network.
Mr Weston also shed light on the bank’s prospective credit assessment process, which he said would be data-centric.
“In this day and age, data is so powerful, data used well will make better lending decisions than a human working through bank statements, tax returns or pay slips,” Mr Weston said.
“Being a digital bank, we will look to make data-based decisions, but we need to make sure we’ve done enough testing that we are comfortable with that.”
Mr Weston said the bank is “working through the finer details” of its service offering to ensure that it is compliant with responsible lending obligations.
“[We] need to make sure that credit is not unsuitable and that we understand customers’ needs and objectives,” he said.
“That’s more than just looking at bank statements and working out their expenditure and income. We’re just working out how you best do that from a digital perspective.
“We’re looking to go paperless and be as efficient as we can while absolutely making sure we comply with RG 209.”
The Volt CEO concluded by noting that over the next 12 months, the bank aims to roll out all of its deposit, personal loan and home loan products, before gearing for entry in the SME lending space in 2021.
[Related: Volt Bank releases savings account details]