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Big four business bankers flood Judo with job applications

James Eyers
James EyersSenior Reporter

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Around 1,500 business bankers employed by the major banks have knocked on the door of Judo Bank looking for a new job in the nine months since it was awarded a banking licence, its co-CEO Joseph Healy said.

Judo co-CEO Joseph Healy: "We see the growth curve continuing quite strongly during the course of 2020." Photo: Jim Rice

The number of bankers serving small-and-medium-sized business customers in the incumbents who are looking to jump ship suggests many are fed up with the bureaucracy and antiquated technology, he said.

Judo has given 100 a fresh start, lifting headcount from 70 to 170 since receiving its licence from the Australian Prudential Regulation Authority in April.

"The number of people who want to join the bank has exceeded our expectations. Never a day goes by when we are not approached by several people looking to talk to us about joining the bank," said Mr Healy, who formed Judo after leaving NAB.

"We are currently employing one for every 15 applicants we are seeing, with 90 per cent from the major banks."

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Judo has just gone past a symbolic landmark of $1 billion of loans, with a further $300 million already approved but yet to be drawn down.

It is a minuscule number compared to the estimated $350 billion SME lending market. But Mr Healy says it expects to grow steadily and surpass $3 billion of lending by the end of this calendar year, while "continuing to be very disciplined with risk management".

"We see the growth curve continuing quite strongly during the course of 2020. I don't think there is a fintech or neobank anywhere that can demonstrate the traction that we have."

Around two-thirds of its new customers have come from major banks, whose lending approval times have slowed down in the wake of the Hayne royal commission. Mr Healy said many customers have reported frustrations that the majors banks had become more risk adverse.

"Hayne has definitely helped us a lot – there is no question about that," he said. "It has shone a light on poor service and Judo presents a credible alternative."

With financial regulators emboldened by the royal commission and pledging additional crackdowns on risk culture, Mr Healy said it was wrong to blame the regulators for the rising risk aversion.

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Judo is fully prudentially regulated and he said Judo welcomes the current regulatory approach. He said it's banks old technology and clunky processes that are holding them back, not the additional regulatory scrutiny.

"We are not encumbered by legacy technology, legacy systems, legacy policies and procedures, complexity, or legacy management thinking – the challenge the larger banks struggle with is sheer complexity of their organisations and antiquated nature of their technology," Mr Healy said.

"When we built Judo, we went to great pains to make sure that when we push a button, the information about customers and reporting to regulators and investors is there and accessible. This is light-centuries away from where the big banks are, and creates a big advantage for us in terms of how we are able to deal with the regulatory environment.

"I think the changes we have seen in the regulatory environment are welcome, and the industry should be able to adapt without any trade-offs in meeting the needs of customers."

Judo says 95 per cent of its loans to SMEs have come from its retail and business deposits, higher than its target of 75 per cent to 80 per cent. It has wholesale funding lines established to meet the gap. It has been able to attract deposit funding by offering interest rates to savers at the upper quartile of deposit rates. These remain lower than funding rates from capital markets.

Judo was one of four new banks APRA licensed in 2019; the others – Volt, 86400 and Xinja – are focused on retail banking.

James Eyers writes on banking, payments and fintech. He is a former legal and investment banking editor at the AFR, has degrees in commerce and law from UNSW, and is co-author of Buy now, pay later: The extraordinary story of Afterpay Connect with James on Twitter. Email James at jeyers@afr.com.au

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