Judo Capital, a new lender focused on the SME market, has launched officially in Melbourne and says it is on track to raise $100 million in equity.
Behind Judo Capital is a troop of former National Australia Bank executives — including co-founders Joseph Healy, David Hornery, Alex Twigg, Tim Alexander, Chris Bayliss and Jacqui Colwell — who have been working to build Australia’s “first true challenger bank” for the SME market, taking inspiration from challenger banks in the UK such as Aldermore, Shawbrook and OakNorth.
The lender’s product range includes business loans, lines of credit, equipment loans, finance lease, and home loans for business customers.
According to Judo, the “financing skills needed by the SME community have been lost to increasingly centralised functions and cookie-cutter lending policies”.
“Culturally, many banks have come to view risk management as a specialist function removed from the customer, rather than a core competency of a relationship banker,” said CEO Mr Healy.
“They have also become very product and sales driven in a way that has not served their customers well. At Judo, no banker will be driven by sales targets.
“We believe that there is a place in the market for a credible player committed to traditional relationship banking.”
In a bid to put the customer first, Judo said it will make credit decisions on the quality of the business, not just the quality of the security.
“[W]hen it comes to making the important lending decisions, it takes one of our people to say yes, and two to say no. Our customers also deal directly with decision-makers who have the power to assess each application on its merits, with loan decisions made in just five days,” Mr Hornery said.
While the lender will operate on a traditional “relationship-centric” model, it will be using modern technology as an “enabler of [its] relationship proposition”, he added.
Judo selected BankSight and Microsoft to develop a cloud-based API service fabric and “customer-centric application ecosystem”.
BankSight’s CRM and Deal Builder solution will allow Judo lenders and partner brokers to manage the lifecycle of an SME opportunity, from initial lead, to application, to final decision.
The lender’s platform has also been built so that it can respond fast to emerging open banking laws.
“Starting with a blank sheet of paper is a fabulous opportunity, but it’s not easy… Wanting to flip an entrenched industry model on its head makes it that much more difficult again. We were driven to find like-minded technology partners who wanted to go on the journey with us and make a difference," said CTO Mr Twigg.
"The BankSight team understood it from day one and the Microsoft platform worked well, which freed us up to focus all our efforts on creating a customer-centric business, rather than the ins and outs of integrating and securing data and technology.”
Judo to partner with “handpicked” brokers
The lender said it will partner with a handpicked selection of brokers.
“We are not the lender of last resort, so it won’t be a blanket accreditation to all brokers," chief customer officer Mr Bayliss has previously told The Adviser.
"We will build our network carefully and gradually. We don’t see ourselves taking on any more risk than the big four. We will just have a better ability to understand that risk, in a way that a commoditised service doesn’t value.”
The chief customer officer has also previously said that partner brokers will be getting “unprecedented full access to [Judo’s] credit policy and CRM system, allowing brokers access to their customer information.”
“We don’t want to be hitting 50 per cent success rates with our broker partners – we want them to feel like they are an integral part of our business and hence approving the vast majority of the deals presented. They will know exactly what type of deals we want to do, will have close relationships with our relationship managers and be working with customers together,” Mr Bayliss said.
The lender, which has 40 employees in its Melbourne headquarters, is currently in the process of obtaining a banking license from the Australian Prudential Regulation Authority.
It plans to expand into NSW next and other states in Australia over the coming 12 months.