Would you like to bank with Afterpay? Why more brands offer bank accounts
Steve Weston discusses BaaS at Intersekt. Image: http://www.bake.agency/
Dealing with a non-bank might be the norm sooner than you think.
If your favorite brand started offering a bank account, would you change? This is the question Australians may have to start asking themselves as a new banking model allows you to open a bank account with a business that is not a bank.
This new model, called Banking as a Service (BaaS), will allow businesses to use a bank’s license to offer financial products. This means that you will be able to open a bank account with your favorite brands and enjoy the same security as a traditional bank.
Volt Bank, the first of Australia’s new neobanks to be licensed as a bank, plans to allow other businesses to use the license to offer bank accounts.
Volt Bank CEO and founder Steve Weston believes this is the future of the bank.
âIn the future, more of us will be banking with our preferred technology provider, retailer, air insurer, telco and fintech,â he told The Finder. “And they will want to offer banking products and have access to payment rails, but they don’t want to become a bank, so they will need banking partners like us.”
As a first step, Volt Bank is looking to work with partners who will have a Volt branded account. Subsequently, it will offer a white label option, in which companies can add their own branding to the account.
Volt Bank is not the first bank to look into BaaS. Westpac, one of Australia’s Big Four banks, also allows others to use its banking license to offer products. One company that will accept this project will be the Afterpay platform, which soon plans to offer a cash management account and a savings account.
âAfterpay customers will be able to use their new savings account to conduct the majority of their money management activities, including paying bills, withdrawing cash and budgeting,â says ASX’s announcement. ‘Afterpay.
Using Afterpay’s license and regulatory infrastructure, Afterpay will be able to offer a secure and comprehensive account without becoming a bank itself.
While this is still a relatively new concept, it is a concept that is happening in other markets as well. In the United States, Apple launched its credit card through Goldman Sachs and Google Partners With Banks To Provide Digital Bank Accounts Through Google Plex.
Weston believes these types of partnerships will become more common.
âWe’ve always said the majority of Volt’s customers will go through partnerships,â he said. “And it was actually aimed at what customers would want and need from the banks in the future.”
Is it safe?
In Australia, bank deposits up to $ 250,000 are protected by a government guarantee. For this guarantee to apply, the bank must hold a banking license. As these companies offer licensed partner bank accounts, your money will also be protected.
Why do business with a non-bank?
The neobanks that have taken to Australia in recent years have all started with one common goal: to change the way people do their business. They do this in different ways, but common strategies include easy enrollment, a sleek account, no branches, low costs, and perks like insurance and reimbursement. Businesses that want to offer bank accounts want to do something similar.
Speaking to the financial reviewLee Hatton, executive vice president of Afterpay, says Afterpay bank accounts will be more like a shopping experience than a banking experience.
âWe are not building another ‘me too’. There are some functions, like capturing a deposit and making payments, which are the same. But the experiences we are building around will be nothing like a bank or a neobank. “
Competitors in the space include Up Bank, which offers a transaction and savings account, as well as 86,400 which offers the same. Volt Bank currently has a beta testing savings account and a transaction account, Volt Pay, which it plans to launch to the public by 2021-2022.
No BaaS banking product has been released to the public so far, so it remains to be seen whether how Australian banks will be turned upside down or whether Australians will simply have more choices as to who to bank with.
To learn more about neobanks, including Volt Bank, check out our guide to neobanks or find out how Afterpay works in our review.