Brokers will play a major role in the distribution strategy of a new SME lender that has been purpose-built by senior business banking executives.
Judo Capital has set its sights on becoming a major player in the business banking space, following in the footsteps of UK-based small business banking disruptors Aldermore and Shawbrook that have forged a unique way of helping to unleash the potential of small business customers by providing old fashioned relationship banking with modern, legacy-free technology, processes and systems.
Unlike the many ‘fintech’ lenders that have hit the Australian SME lending market in recent years, Judo has a formidable team of experienced co-founders: former NAB group executive and business bank CEO Joseph Healy, fellow NAB alumni David Hornery, Kate Keenan, Tim Alexander, Malcolm Hiscock, Jacqui Colwell and ex-UBank CEO Alex Twigg.
The co-founder team also includes Standard Chartered’s former global head of personal banking Chris Bayliss, who served as a NAB EGM between 2010 and 2012.
Judo has now turned its attention towards brokers. The group recently hired ANZ’s former national partnerships manager George Obeid, who was responsible for managing key relationships between the major bank and Australian aggregation groups.
“We have deep networks, we know who the best business bankers and brokers are and we’re being very selective in only hiring the best. Like George for example, a highly-regarded individual at ANZ and well-respected among SME brokers,” Judo co-founder Chris Bayliss told SME Adviser.
“Brokers will play a very important role in Judo Capital. We will deal almost exclusively through brokers initially. We will keep our powder dry in terms of what the future holds but initially 80 to 90 per cent of our business will be sourced through third-party intermediaries” Mr Bayliss said.
“We have a great deal of respect for the broker industry in particular. Their dominance now in terms of serving the finance needs of the SME market is about 30 per cent of flow,” he said.
“SME customers are actively seeking out brokers because they want to have a working relationship with someone who is prepared to spend the time understanding their business and their financing needs. We are very keen to build strong relationships with SME brokers. They will be a major part of our distribution strategy.”
Mr Bayliss explained that Judo Capital is readying for launch in Q2 after locking in seed capital and experiencing overwhelming support from funding partners.
“We have spent a great deal of time talking to potential financiers and there is a huge amount of support, both globally and domestically, to invest in a SME challenger bank” he said. “Particularly given the profitability of the Australian banking market — SME banking is one of the most profitable segments for the Australian banks”.
Judo started out as an idea some 18 months ago when the co-founders realised the opportunity that existed in the market for a challenger bank to address the unmet financing needs of the SME space.
Mr Bayliss stressed that the business is not a fintech. Rather, its focus is on the type of relationship banking that has all but disappeared in recent years following the rise of digital automation and the industrialisation of the service offering.
“Judo is being purpose-built from a blank sheet of paper, free from bureaucracy and legacy systems. And whilst we are leveraging the latest technology as an enabler to premium service, it is the depth of the relationships that we will build with our small business customers that will define us and set us apart from the rest” he explained.
“We are following a path that has been well trodden in the UK,” said Mr Bayliss. “Post 2008 a number of challenger banks emerged in the UK SME space: Aldermore, Shawbrook, Handlesbanken, to name a few. They all saw the same opportunity: a space for a new challenger bank to emerge that anchored themselves on the old-fashioned values of traditional relationship banking.”
The group has set its sights on obtaining a banking licence and eventually challenging the incumbent ADI’s. In the meantime, Judo plans on hitting the market in the first half of 2017 with a full suite of debt products tailored to specifically support the needs of their customers’ business financing requirements.