Microsoft and Lab3 agreed to partner with Australian neobank Volt for its Banking as a Service play

  • Australian neobank Volt has partnered with Microsoft and Lab3 to develop a BaaS offering.
  • This revenue driver could afford Volt a level of financial stability rarely seen among neobanks.
  • Insider Intelligence publishes hundreds of research reports, charts, and forecasts on the Banking industry with the Banking Briefing. You can learn more about subscribing here.

The Australian neobank, tech giant, and cloud-based technology provider will jointly develop a Banking as a Service (BaaS) platform dubbed Volt 2.0. The Microsoft Azure-based platform will be scalable and offer clients white-labeled banking services with secure data storage and advanced analytics capabilities. Volt’s consumer banking arm remains in beta mode, with only savings accounts available to participants, though its website indicates that spending accounts are in the works.

the banking services stack

Australian neobank Volt partners with Microsoft, Lab3 for BaaS play.
Business Insider Intelligence

Volt’s digital savvy combined with the power and scale of Microsoft’s Azure platform could yield a potent BaaS player and distinguish Volt from fellow Australian neobanks. Like other digitally native banks, Volt’s banking offerings aren’t dependent on legacy systems, making it well-suited to the digital nature of the BaaS business model.

And in Microsoft, the neobank has a partner with the power and scale to offer Volt 2.0 unlimited scaling potential, making its future prospects rosy. A notable caveat, however, is Volt’s youth and current beta status: It has yet to fully battle test its product. The neobank’s ability to design an appealing user experience that it can white-label for BaaS clients could be the determining factor in Volt 2.0’s early success.

A successful BaaS play could grant Volt’s bottom line a resilience that few neobanks enjoy. Profitability is almost universally elusive for neobanks, but BaaS services can be a revenue generator that isn’t dependent on the transaction volume of Volt banking customers, fee revenue, or paid account subscriptions—some of the more popular ways neobanks make money.

And if Volt 2.0 takes off, the neobank could even pivot away from consumer banking, a path that Green Dot is taking in the US: It offers its own banking services but has leaned more heavily on its role as a BaaS leader for revenue in recent years. It’s now a critical BaaS backbone for several large-scale companies, including Apple, Intuit, Uber, and Walmart—likely putting it in a stable financial position, even as other financial institutions take heavy profit hits related to the coronavirus pandemic.

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