About 10 percent of the mortgages placed by AFG’s network of 2,975 brokers, or $ 10 billion in loans, are funded by its existing white-label providers: Advantedge, which is part of NAB, and Bendigo and Adelaide Bank. In addition, AFG Securities directly financed $ 3 billion in loans. AFG CEO David Bailey said AFG “is looking to develop this and we need to use more technology to achieve it”.
Volt’s loan valuation technology will be used by AFG to create a new digital mortgage product for Millennials, which is expected to launch in the first quarter of the 2022 calendar. The AFG-branded PFM app will be tested in the fourth quarter of the 2021 calendar .
The offer comes at a time when the big banks are suffering from mortgage bottlenecks as a deluge of borrowers look to refinance and first-time homebuyers flood the market. AFG data shows that the weighted average mortgage approval timeframe for lenders in its panel is 27 days. Mr Weston said Volt could provide unconditional approval for a simple loan in 12 minutes. “We are able to reduce turnaround times in transformational ways,” he said.
Other mortgage brokers are also stepping up digital provision of their own mortgages. For example, Aussie Home Loans launched Aussie Online in April using Tic: Toc execution technology and Bendigo’s balance sheet.
In an example of a dynamic sometimes referred to as “finance at the edge,” where non-banks add banking products to digital services, Mr Bailey said AFG would eventually offer deposits that would appear on Volt’s balance sheet.
“We will leverage our distribution base to enable brokers to offer a Volt bank account on time,” he said. This could help brokers get the most out of the new PFM tool by allowing them to use the government’s open banking regime to import complete customer repayment histories and assess all income and expense data.
Mr Weston said mortgage brokers could also use banking as a service to show customers better deals on gas or electricity and to create products that help potential customers save for a deposit. Volt also plans to tap the AFG network to expand into personal and business lending.
The AFG operation is part of an enlarged capital increase. AFG spent $ 15 million to take an 8 percent stake in Volt at a pre-currency valuation of $ 150 million.
Volt increased her Series E fundraiser from $ 50 million to $ 85 million, after being forced to raise funds at a discount last year as she battled COVID. He hopes to attract institutional funding in a further increase later this year.
“Between this increase and the next increase, we will go from starting up to having the business economic engine and capital profile of a bank,” Mr. Weston said.
Since Volt announced its pivot to banking as a service last year, Westpac has also entered the space, making transaction account deals with Afterpay and SocietyOne.
Mr Weston said there are plenty of opportunities for both players. Volt was targeting cryptocurrency exchanges and could also provide deposits to residential property management companies to handle payments between landlords and tenants. “The demand is far greater than our capacity to meet it,” he said.
Volt only raised $ 87 million in deposits in a test environment. Xinja collapsed after opening deposit accounts too early, forcing her to fund generous interest payments before drawing income from loans. Volt has 1,400 potential clients on a waiting list and plans to open the doors a few months before its mortgages hit the market early next year.
It also aims to raise funds through cash management accounts, to attract deposits from self-directed super funds as well as those held by legal entities, a market dominated by Macquarie.
It plans to serve universities, boards and pension funds by offering deposit prices in the top quartile. And he’s setting up warehouse finance lines. These were not yet in place but “are well advanced in terms of discussions,” Weston said.
Mr. Bailey said the addition of a personal finance management application “would allow our brokers to connect with their clients on a daily basis and also prepare them for the digital transformation of the home loan process.”
Other non-bank entities are also entering PFM, including Finder, whose application has 155,000 users. Meanwhile, CBA has invested heavily in its app and ANZ is working with Frollo.
Mr. Bradley, the former Chairman of Stockland, GrainCorp and EnergyAustralia, served as Managing Director of Perpetual from 1996 to 2003 and Chairman of HSBC Australia from 2004 to 2020. He will join Volt’s Board of Directors as Chairman this this month.
“The Volt team successfully overcame the COVID disruptions of 2020 with their banking as a service strategy intact,” he said. “With the new strategic partnership with AFG and additional capital funding, Volt is well positioned to grow rapidly.”
Current Volt chairman John Masters will become vice chairman and chairman of the audit committee.