Small and medium-sized enterprises (SME) are an extremely important engine in terms of the health of the economies around the world and this is particularly the case in Australia. According to an East & Partners 2018 Report, there is a shortfall to the tune of AUD $83bn in lending to the SME segment.
Judo Bank is the first Challenger Bank to be launched in Australia focused on the SME segment intending to build relationships with companies with turnover of up to AUD50M.
At one time, the idea of starting up a bank was literally a “non-starter” given the capital required to invest upfront in software and the technology infrastructure, data centers as well as the bank premises for a business that will take an undetermined amount of time to scale and become successful. A big risk vs reward dilemma. This is the case no more.
Judo has subscribed and on-boarded to the Temenos software-as-a-service cloud offering which we run on the Microsoft Azure Cloud service. Through this process, which took 6 months, and having their full banking license, Judo is ready to establish a production-ready data-driven front-to-back solution.
Putting the Relationship Back Into Banking
Typically, Challenger Banks are very much technology-led. This is not the case with Judo, who see face-to-face service as a differentiator to the “one size fits all” service delivered by the incumbent Australian banks. But personalized service does not mean inefficient or slow. Judo will deliver a credit approval decision to every customer within 5 days. The customer will have direct access to the decision maker and it will take one Business Banker to say “yes” and two to say “no”.
Even though Judo plans to invest in people who will travel to customers instead of expecting customers to come to them, the business plan is looking to achieve a cost-income ratio of 35%, significantly below the big 4 incumbent banks in Australia.
Having said that Judo will be adopting a people first approach to their business model, it doesn’t mean that technology is not important.
“While our technology is cutting edge, we aren’t defined by it as the fintech sector tends to be; for us, technology is an enabler of our relationship proposition.”David Hornery, Co-founder and Joint CEO
Technology & Data, the Weapons of Choice in the Challenger Bank Wars
In stepping onto the field as Australia’s first Challenger Bank for SME’s, Judo needs to be highly efficient, translating into very low-cost, and it needs to be very effective in terms of delivering the right experience to the customer through its Relationship Managers and Credit Officers.
Data Analytics, seamlessly integrated with customer-centric lending processes delivered via a cloud service will drive the personalization that Judo will deliver to its SME Clients, initially during onboarding but then monitoring the continuing health of the relationship.
As one of Judo’s customers stated “Banking as it used to be. Banking as it should be”.
“With the big banks’ shift to industrialization and centralization, SMEs have lost the human interaction and tailored service that they so deserve and crave. Judo’s mission is to bring back the craft of relationship banking, powered by the best modern technology. With Temenos’ commitment to providing core banking as-a-service, we can continue to focus on empowering our customers, the businesses that are the backbone of the Australian economy.”Alex Twigg, Co-Founder and CIO