Aggregator AFG and neobank Volt have announced a new link up that could revolutionise the way that customers interact with banks and brokers.
AFG will launch an app, known as ‘Handl. By AFG’, that gives customers an interface to control all of their banking products, and a white label home lending product, ‘AFG Home Loans Sparc’, powered by Volt’s capacity.
“What we’re seeing globally is something that is described as either ‘integrated finance’ or ‘embedded finance’,” said Volt CEO Steve Weston.
“What that means is that customers in the future will, more often, do their banking through their trusted business partner, whether that be Apple, Google, a retailer, an airline or a mortgage broker.”
“That replaces what they have done for 600 years, which is go to a bank brand. There’s a whole heap of benefits for customers from that, and there’s benefits for the corporation in this case, which is AFG.”
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“The AFG-Volt relationship is the first of its type in the mortgage finance world. What it will entail initially is a white label banking app, branded as AFG, and also a white label digital mortgage.”
“In time, it will grow into a whole range of Open Banking solutions where customers will not just have the convenience of being able to see their credit cards, loans, super and balances through the AFG app, but also get help with budgeting and spending.”
“They’ll be more able to easily apply for home loans, and then it will move into deposit accounts branded by AFG. When Volt moves into SME and personal lending, we’ll also look to offer white label banking products to AFG.”
For Weston, the new app presents a unique opportunity for AFG to expand their lending options and control more of their process.
“Effectively, AFG will put a moat around their customers and themselves,” he said. “Today, when 90% of AFG customers will go to lenders that aren’t called AFG Home Loans, that customer is then in the hands of another party.”
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“If AFG can provide all of the banking services that the customer needs, they’re likely to retain them for a longer period and increase revenue.”
“To do this, AFG would have to have become a bank itself, or partnered with a bank to offer these products and services: there aren’t any banks in Australia that can to the same extent.”
“In terms of mortgage broking and offering a white label app, this is the first time that it has happened in Australia.”
Weston described the new dynamic as B2B2C: business to broker to customer. The brokers will be able to take advantage of Volt’s capacity to access faster turnaround times and better options for their customers.
“Volt is a business, and we go to the AFG brokers who are a business,” he said. “Ultimately, the people who open up and use the accounts are the customers.”
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“What happens in terms of the real life experience is the customer going to the AFG broker and wanting to talk about some sort of finance. What the broker will say is that they have this AFG app where you can see all your accounts in the one place.”
“Applying for home finance using the app will make it a much easier process where we can look at expenditure, income and the like, as well as factoring in saving for a deposit and helping with budgeting.”
“As a broker, you have a best interest duty to put the client front and centre, and on the AFG panel there, will be a huge range of products and lenders, one of which will be AFG Sparc Home Loans, their white label funded by Volt.”
“That has a very quick turnaround time for the vast majority of customers, using data analytics to a much greater extent. If you look at the AFG Quarterly Report, it talks about turnaround times, and in the last quarter, it fell from 25 working days to 22 days for unconditional approval.”
“We are able to do that consistently in under an hour, so the customer is now getting a great banking app, a home loan experience that is competitively priced and with very quick turnarounds, and at the end of the day, the customer has an AFG Home Loan and an AFG app, so they don’t have to go to XYZ to get a deposit and get marketed for a mortgage.”
“In this case with Volt, we absolutely know that the customer ownership lies with the AFG broker, and that is very different to what happens today.”