Innovatia

JUDO BANK AND THE QUEST TO RESTORE CUSTOMER CENTRIC BANKING

it, [Breaking the Banks, 2019] – we have to look at the sweeping changes of globalisation, of efficiencies, the industrialisation of banking from the 1990s onwards. Quite simply, banking, along with other sectors, became increasingly de-humanised. And this led you to depart NAB and co-found Judo Bank. What drove you? Practically speaking, there was an unserviced and growing market. Philosophically, there were human and contribution-to-business-growth motivations. And the enjoyment of fashioning a much needed new business model for bank- ing. As we say to our team at Judo, our dollars are no different than those available from other banks; the difference can only be made in the area of customer service. What is your rejection rate? About 60%, but we inform them quickly, which is part of the service – efficiency. And your lending criteria? We have what we call internally the four C’s of credit, and to a certain extent it is hierarchical. First comes Character, followed by Capacity (or cash flow), then Capital (or equity on the bal- ance sheet), and finally Collateral (or security). On the issue of character, I assume you are speaking of both that of the owners, as well as the business itself? Yes, of course, the two are always closely inter- twined. And this is based on a couple of two- hour meetings in person, as a rule. This is a key advantage of our expert, relationship-led bank- ers who deeply understand businesses and

people and the SME sector. We have a saying at Judo: “Businesses don’t fail, managers do.” And your parameters? We are geared to making loans to SMEs; with a loan size of $500K to $20m, our average loan is $2.2m.

“Businesses don’t fail, managers do.”

Having attained profitability in four years – something of a real milestone – what are your ambitions going forward? We always wanted to build a new foundation for modern banking which would endure for decades, and leave a legacy of value in our be- haviour toward SME business and this impor- tant sector of the Australian economy.

In this interview with Editor-in-Chief, John Keeney, Joseph Healy, CEO and co-founder of Judo Bank charts historical and economic developments in banking. These led to the need for more customer-centric banking practices which characterise his disruptive, rapidly growing business bank.

JK: To be clear, Joseph, you do not consid- er Judo Bank to be a neo-bank, as they have become known? JH: No, not at all. Possibly the only similarity is a keener reliance on contemporary technolo- gy as found at Judo, and apparently this exists also in the neo-bank sector. We are categori- cally a business bank designed to give swift yet customer-focussed service to growth business- es. My understanding of neo-banks is that they are solely for consumers, and to my knowledge have produced few if any convincing, com- mercially successful business models to date. Though it may be too early to make any final judgments about this sector.

You were, for some years, a senior team member at NAB business banking. What in- fluence did this have on you, and how did this inform the creation of Judo Bank? NAB business banking was as good as any of the big banks in the SME sector, if not better, and a useful experience for me. It’s unreasona- ble to point at specific banks as deficient in this space, rather more informed to examine major trends and forces which occasion change of be- haviours – structural changes, not only in bank- ing but elsewhere. Such as? In this case – and I have written a book about

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