Sydney-based volt has won approval to become Australia’s first digital bank.

volt bank limited was granted the first restricted “authorised deposit-taking institution licence” by APRA (Australian Prudential Regulation Authority).

The new restricted licence framework, which comes into effect today, is designed to help new entrants to the banking industry.

A minimum requirement is $5 million in assets, $3 million of which must be liquid.

Those given a restricted licence have to build resources and capabilities to meet APRA’s full prudential framework and start full-scale banking within two years or they must exit the industry.

volt bank is the first new retail-focused bank licensed since the early 2000s.

“volt bank will show Australians how banking can be done in a simpler and better way,” volt bank CEO Steve Weston said.

“With no legacy systems and no branch infrastructure, we are starting from scratch and building a bank the way it should be.

“We acknowledge we are at the start of our journey, but the trust between many Australians and their banks has been broken and the path to repair starts with new market entrants who are willing to do things differently.”

Weston is volt bank’s co-founder and most recently was CEO of mortgages and managing director of retail lending for Barclays (UK).

He and co-founder Luke Bunbury worked together at St George Bank and Challenger Financial Services Group in the early 2000s.

The bank says its platform will include rapid account opening enabled by smartphone facial recognition technology, simple transfers, a highly competitive savings and term deposit account and leading edge financial tools.

Weston says UK bank disrupters, such as Monzo and Revolut, have had a significant impact in their home markets, securing hundreds of thousands of customers disaffected with old banking products and old banking experiences.

They have a team of more than 35 with deep banking, technology, data and marketing expertise.

volt has so far raised $15.7 million in equity capital via three funding rounds.

“We will continue to assess our funding requirements in line with our growth and are taking our expansion strategy one step at a time,” says Weston.

“Our immediate focus is building a market leading digital banking platform, while remaining fully engaged with APRA and other regulators to demonstrate our product and systems capabilities meet the criteria to transition to a full banking licence.”

Xinja, another digital bank startup, says the fact that the first restricted licence has been granted is great news for the industry.

“It shows that the market is there for something new in banking,” says CEO Eric Wilson.

“Hats off to Volt for getting the first restricted licence and we hope to follow suit soon so that we can extend the product suite to transaction accounts.

“We have always said we welcome this kind of competition. We already have our app and prepaid card in market and are soon to launch home loans.”


This article first appeared on Business Insider Australia, Australia’s most popular business news website. Follow Business Insider on Facebook or Twitter.