Banking as a service makes crypto a lifeline

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BTC Markets is an Australia-based digital asset exchange with over 325,000 clients who have traded over AU $ 17 billion since its launch in 2013. Yet BTC has been continuously and successively de-banked by traditional banks.

“Sometimes this has happened with very little notice,” says Caroline Bowler, CEO of BTC.

“They tell us it’s nothing we’ve done; it’s just the nature of our business. They just don’t trust us because we are in the world of crypto finance. We are licensed with (the financial intelligence agency) AUSTRAC, but they couldn’t feel comfortable with what we do as a business, and that’s a company wide issue. industry, not just for us. “

Luckily for BTC, there is an alternative at hand, and that is the new model of banking as a service being pursued by some of the new entrants to Australia’s banking industry.

Fill the void

Last week, BTC signed an agreement with Australia’s first neo-bank Volt, to provide banking services to BTC customers.

Volt has a banking license which makes it an authorized depository institution. It offers protection up to a maximum of AUD 250,000 for each account holder under the government’s financial claims program.

Volt therefore has all the legal and regulatory properties of a bank but operates in an entirely new way, providing its banking services in a new relationship with BTC.

From now on, BTC clients will be able to open AUD accounts with Volt and then use them to trade in and out of the BTC platform. Thus, it functions as a ramp in and out of BTC activity.

Previously, customers had to transfer funds from their accounts to BTC trust accounts to complete transactions, which slowed down the process and created double processing.

It sounds simple, but this is only the second such deal in Australian financial services following a similar deal between big bank Westpac and Buy Now Pay Unicorn Afterpay.

Strategic imperative

As it seeks to expand into the Australian market, Andrew Clouston, director of clientele and partnerships at Volt, said the deal with BTC was a “strategic imperative” for the bank.

“We’ve spent a lot of time building a platform for all of our banking infrastructure, adding an API to the one that allows us to distribute our services through partnerships,” says Clouston.

New to the scene, Volt has around 10,000 account holders. The opportunity to acquire new clients among BTC’s 325,000 clients and potentially engage them with other services is therefore an important client acquisition opportunity. Customers have to hold or move money, and this is better integrated with the user experience of that third-party provider, ”says Clouston.

“We believe there is a whole range of partner companies in Australia and around the world who will enjoy providing this type of customer experience that eliminates friction, and we hope it will be a more enjoyable experience than existing banks. “

Volt also offers loans as a service platform which can be white label for clients and has a partnership with global BaaS aggregator Railsbank to offer its services internationally.

Clouston says open banking, which has been slow to gain momentum in Australia, can be another catalyst for change and help drive adoption of its business model.

Decentralize finances

Caroline Bowler of BTC said the deal represents a broader trend in Australian finance, what she calls “decentralized finance.”

“Our clients want to have great control over their finances, and this model helps them do that,” she says.

“It enables that by making banking services part of the experience.”

She also sees crypto as “opening up a whole new ecosystem of payments and ways to transfer value”, with deals like the Volt deal being the catalyst and catalyst.

It was not just BTC customers who were frustrated with the attitude of traditional banks; Australian regulators too.

Recently, in a Senate committee, traditional banks were accused of deliberately flushing out crypto operators and stifling industry development.

The Volt deal will be closely watched, and a key metric will be how many BTC clients they gain as account holders.

The customer acquisition strategy is expected to be successful. The deal is the first in a long line, not just for Volt but for the growing number of Australian neo-banks who are yapping at the heels of traditional players.

Lachlan Colquhoun is the Australian and New Zealand correspondent for CDOTrends and DigitalWorkforceTrends, and the editor-in-chief of NextGen Connectivity. He is fascinated by how companies reinvent themselves with digital technology and collaborate with others to become whole new organizations. You can reach him at [email protected].

Image credit: iStockphoto / Brankospejs

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