Neobank Volt has had its public launch and IPO scuttled by Australia’s shutdown, but CEO Steve Weston says the future is ‘far brighter’ because of it

Volt CEO and founder Steve Weston Supplied
  • COVID-19 put Volt’s plans for a public launch, $50 million capital raise and IPO all on ice this year.
  • Founder and CEO Steve Weston says that, while he’s frustrated to be delayed, there are positives – including getting through the pandemic without taking on any bad debt.
  • It will now attempt to open to the public and launch lending around September or October of this year and float on the sharemarket next year.
  • Visit Business Insider Australia’s homepage for more stories.

2020 had been slated to be a big year for digital banks, but the spread of COVID-19 quickly put a pin in that ambition.

Take Volt, which had been readying to finally unveil itself to the public, was looking to close a major offshore funding round, and launch itself on the sharemarket all in the same 12 months.

Halfway through the calendar year and the dust is starting to gather on all three. Founder and CEO Steve Weston is trying to look on bight side.

“It’s been frustrating because I would have really loved to have been in market right now and lending, but then I look on the other side and there are some positives to be had because we waited,” he told Business Insider Australia.

While it put a major $50 million offshore capital raise on hold, and pushed back Volt’s IPO until at least next year, Weston says there are benefits to restricting operation to its waitlist during COVID.

“One is having a clean balance sheet and not having to work through those problems existing lenders are going to have to work through.”

As the Australian economy heads into a recession, the souring of debts is going to rank as a major concern for lenders nationwide.

“Even if your credit record is unblemished right now, you still might lose your job due to no fault of your own. So we’ve decided to push back going into lending until later in the year when things have normalised,” Weston said.

“As long as [Australia] doesn’t have to revert back to restrictions, then I can see us commencing lending in maybe September or October, but not much before that,” he said, noting a public launch would coincide with that prospective date range.

While 86 400has lent out $30 million, and Up can lend via its partnership with Bendigo Bank, Volt and Xinja have been left stuck operating at a loss in the deposit market.

Xinja, having both launched to the public and offered the best interest rate, was actually forced to temporarily prevent customers from opening up new savings accounts, such was the demand.

While some have criticised their rush to market without the golden goose of banking for support, Weston defends the strategy.

“No matter what type of bank you are, you need to have a pipeline of deposits to lend out, and Australia’s neobanks are all looking to get lending far sooner than the ones in the UK and Europe,” he said.

“Had Xinja had a crystal ball and known they were going to shoot the lights out maybe they would have pumped the brakes on deposits a little earlier. They didn’t know they were going to become the fastest-growing bank in the world but when they saw the tsunami of deposits they had no choice but to slow it down.”

Volt for its part says it won’t launch publicly until it has lending ready to go.

The market is growing

Despite those setbacks, Weston says the trajectory of neobanks is actually “far brighter because of coronavirus”.

“More and more people are spending time at home living their lives on technology, in doing their banking on technology and as a result, neobanks are going to appeal to a broader cross-section of the community,” Weston said.

“I can particularly see that happening with older Australians, who may have been more comfortable going to a bank branch but are suddenly banking from home.”

He anticipates the approaching open banking scheme will only accelerate that as it “illustrates quite clearly that the big guys aren’t giving customers a good deal”.

In the meantime, he says Volt is still seeing “a real spike” in the number of partnership enquiries as it looks to amass a large customer base by offering its services via large companies like Cotton On and PayPal, with more to be announced.

The “stealth play”, Weston claims, justifies Volt’s slow and steady approach, as everyone from retailers to airlines looks to offer their customers more.

In practice, Weston sees those businesses able to either partner directly or use Volt to launch their own branded transaction accounts for example.

“It really is the future of banking and no one know about it yet.”