SME lender Judo Capital has said that brokers will continue to be a “critical strategic partner” once it officially becomes a bank later this week.
Judo Capital, an SME lender that officially launched in March 2018, has revealed that it is expecting to become an authorised deposit-taking institution (ADI) later this week, once APRA approves its banking licence.
Speaking at the AltFi Australia Summit 2019 in Sydney on Monday (15 April), Judo Capital co-CEO Joseph Healy told delegates that Judo Capital will soon become Judo Bank and begin offering consumers retail deposits in addition to its core SME lending offering.
When asked by The Adviser what Judo Bank’s plans for its broker partnership were, Mr Healy said that the broker channel was identified as a key channel when the lender was first being created and will continue to be so moving forward.
He said: “When we were designing Judo three and a half years ago, we recognised that the broker channel was going to be a critical strategic partner. It was not going to be a distribution channel that was in conflict with everything, but instead was integral to the way in which we were building our business.
“That is going to be the case going forward. The ability to build something that works in partnership with the broker community has always been part of our thinking and that will not change.
“So the granting of a banking licence and access to deposits just means that brokers looking at Judo know we have greater capacity to lend.”
Mr Healy added that the challenger bank will differ from the incumbent banks in that it will be “based on a relationship proposition and have bankers that are experienced and understand businesses outside of their security”.
“I think that will be a powerful thing for brokers and their clients, because the market doesn’t do that today,” he said.
George Obeid, Judo Capital’s managing director, third party, told The Adviser that the new bank will “still be able to solve brokers’ queries and brokers’ needs around having access to a skilled professional and having access to a decision maker covering all aspects of asset classes (commercial loans, equipment finance, lines of credit, finance leases and home loans for SMEs), along with a new suite of products”.
Mr Obeid added that Judo was “centred around having highly skilled business lending professionals” that gives brokers “the ability to deal directly with the decision maker who is empowered with judgement-based decisioning, for faster, smarter outcomes for brokers and their customers”.
“By faster, we commit to a five-day turnaround for approvals every time,” he said. “By smarter, I mean common sense decisioning that puts the four Cs of credit in the right structure.”
Mr Obeid elaborated: “The primary focus will be to assess the character of business customers and the capability of the people behind the business. The second is cash flow – this will be assessed with a deep understanding of the customer’s business and the impacts of the transactions they are undertaking. The third thing is capital – understanding the degree of capital required depending on the aspects you need for the customer’s transaction. And lastly, collateral – if for any reason we need to leverage collateral in this, it’s understanding what type of security it is and recognising the value in the balance sheet assets rather than just property itself."
According to Mr Obeid and Mr Healy, this will make Judo Bank more closely aligned to “old-fashioned banking where the bankers understood their customers and what their customers needs were while having the skill to execute that as well”.
Mr Obeid, who is also president of the MFAA E&CF Forum, said that Judo Bank will continue its focus on providing training and education to brokers looking to move into the commercial or SME market to ensure that they have “the right footing and the right foundations” around this space.
[Related: ASBFEO calls on brokers to help SMEs]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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