Australia’s first SME challenger bank, Judo Bank, leverages technology to connect with customers

Australia’s first SME challenger bank, Judo Bank, leverages technology to connect with customers

Judo Bank was established to serve small and medium enterprises (SMEs) lending needs, and has recently been granted a full banking licence that will allow it launch full deposit-taking capabilities. Alex Twigg, co-founder and Chief Information Officer, helped launch the business as the first challenger business bank in Australia. The company “Like most start-up businesses, Judo started as wishful idea that we’d discuss informally —I don’t think any of the founders imagined how fast it would take hold,” reveals Mr Twigg.

“It’s been a rollercoaster ride that has exceeded all of our expectations. We initially raised  around AU$20m worth of seed capital to get the business launched, then followed that with an AU$120m Series A funding round -the second largest pre-revenue raising for a start-up in Australian corporate history.”

Judo Bank’s ‘judo strategy’ outmaneuvers the incumbent banks by using the nimbleness of its modern technology to rejuvenate the dying craft of artisan business lending. 

Judo Bank has built a system that is enables traditional relationship banking backed by modern, legacy-free technology, processes and systems. Lending decisions are based on the performance of the business; not just the value of the available security, or “collateral” that the incumbent banks concentrate on.

When the company was founded in 2016, it was established with a digital technology mindset. The bank uses a clear technology strategy, with nine simple principles to drive how they will operate the entire technology environment. The firm’s nine principles include not owning IT, being open for business with the adaptable Open Architecture and Open Platform, and ensuring its technology is invisible to the consumer. Judo also ensures it is always prepared to embrace change and evolve its security operations, as well as prioritising all it’s clients’ data privacy. The company will also look to the cloud first, will be identity-led, and will take a holistic approach to its solutions whilst always considering the business’s evolution.

“We don't do digital transformation – we do digital. We have built an architecture that is entirely focused on a digital business model that enables human relationships.  There is nothing to transform, we started with a blank sheet of paper and take a do-it-once, do-it-right approach.” Mr Twigg notes.“We have a multi-cloud approach, and we have created an architecture into which all of our applications can run in any cloud, and whichever is the primary cloud, we have a backup in the other cloud,” states Mr Twigg.

Judo uses Microsoft Azure and Amazon Web Services as its cloud providers and has created a role-based, rule-focused, access management infrastructure using Microsoft Azure Active Directory to enable a federated single sign-on environment for customers and staff. “Digital Identity is very important in the ecosystem and is key to having that role-based access and privilege-based security model. Because of our approach we can simply bolt on new products and services, as long as they can support open standards.”

Mr Twigg argues that Judo leveraging the global cloud providers scale has been critical to the company’s world class security infrastructure. The CIO argues that most large banks around the world would not be able to compete with the investment Amazon and Microsoft are channeling into security infrastructure. “If you are architecting from scratch, and you have the benefit of being able to use the modern security platforms available in the cloud, you can probably secure your data better than you can in a significantly more costly on-premise solution with a very blunt firewall round the outside,” adds Mr Twigg. “It’s a different model that needs a very different mindset to think about how to secure data in the cloud.”

Headquartered in Melbourne with offices in Sydney and Brisbane the company is expanding quickly enabled by technology. As the firm expands, its relationships with its customers strengthen. “I find it so energizing to be able to just drive straight into writing loans with systems that are so logical and straightforward after years spent time wasting with outdated, clunky, illogical dinosaur era systems,” claims Rebecca Evans, a career business banker passionate about making a tangible difference to her client businesses.

Mr Twigg is aware of the reluctance of customers within his industry to use banking services. “Banking is boring,” he says candidly. “Ironically, as an industry, we spend billions of dollars a year, trying to create the-best-way, for people to do something they’d rather avoid. It’s frustrating that as an industry we spend so much time and effort trying to make customers do what we want them to do, rather than actually trying to serve customers and helping them do what they want to do. That however is the result of the industrialization of our industry through cost-out pressures.”

In order to appeal more successfully to business owners, Judo aims to make the advanced technology it uses invisible. Mr Twigg argues that “by making the technology a product of the relationship, rather than the driver of the interaction, our customers and bankers can get on a do what they’re best at doing.” “Bankers can build relationships and customers can build their businesses,” he explains. “This is why we say that Judo is not a technology driven fintech, rather a people enabled bank.”

The technologies that Judo uses enable efficiency. “A banker in one of the Australian incumbent banks would have to at least log into, and probably double-key information into, somewhere between 15 and 22 different systems, which has horrible customer service and efficiency implications. We set out to have one ecosystem where all data flows from the front to the back. We would automate data entry wherever humanly possible, and if we couldn't automate it, we would automatically quality check it. So a banker should be able to visit a customer’s place of business, review the books, agree a deal, complete everything on their iphone and send the docs to the customer before leaving the car park.”

Judo has also established a real-time dashboard process that allows customers, bankers and brokers to all collaborate on a deal. Each participant can contact each other and be able to see different levels of data depending on who they are and what access privileges they have. “It means that if a broker sends a deal to Judo, when the banker works on it and needs another piece of information, they can message out to both the broker and the customer simultaneously,” Twigg explains. “If the customer sees that message before the broker does, they can send a copy of their driving license, for example. The system will OCR that driving license, automatically check it against government agencies for validity, and automatically use it as part of the customer identity validation process. At every step of the way, all parties are kept fully informed of the progress of the deal.. That's probably a really tangible example of the way we've tried to make the technology invisible.”

As well as working closely with global tech companies Microsoft and Amazon, Judo Bank has achieved significant advances by partnering with a small group of likeminded, customer focused businesses, like Over The Wire, IToc, JB HiFi Solutions, BankSight, Realtime, Temenos, Vermeg, GTreasury , Domo, RapidID, TSS and Unifii, who they bring together as a team, all actively sharing information and collaborating to optimize Judo’s offering.

Working with Australian telco Over the Wire, Judo Bank has implemented a full IP telephony system with CRM integration onto every banker’s mobile phone and enabled Judo to become one of the first banks in the world to establish a zero-trust-network (ZTN), the foundation of its entirely SaaS operating model. On top of the ZTN, Judo Bank has worked extensively with iToc, it’s cloud ops partner and TSS our security partner to develop a single role-based access control and monitoring platform using Microsoft Active Directory, B2B (Business to Business) and B2C (Business to Customer) products into which all the SaaS providers ‘plug-in’ to provide a single sign-on for both customers and staff.

Temenos is providing the core banking platform alongside Vermeg and GTreasury, who are providing regulatory reporting and treasury capabilities as a service respectively.

Unifii,BankSight and RapidID have worked closely together to provide a full CRM, onboardingand commercial loan origination system supported by a banker App that facilitates true customer relationships. “The Contact App, is an interesting piece of technology that effectively automates the capturing of compliance records for any customer banker communication, irrespective of the channel they use. Bringing together voice, email and messaging into a single App, ensuring it can all be instantly retrieved for customer service or compliance needs,” Twigg said. Domo was one of the very first partnerships developed by Judo Bank and provides near real-time insight into any element of the Judo operation, available to everyone in the company, from their desktop on smart phone. It was also the pre-curser to Judo Data Achieve Vault Environment (DAVE) which is an event based data lake, built in AWS, that captures real-time data and telemetry from every part of the Judo ecosystem and will become the foundation of Judo’s machine learning capability.

As the bank continues to develop, Mr Twigg reveals the challenges Judo Bank is yet to face: “If you're game enough to have the idea of starting your own bank, then you have to be prepared to face new challenges that you never expected, every day. It's a big mountain to climb, but it's a lot of fun. Our success will come down to the satisfaction of our customers and our constant focus on trying to get that right. The reason Judo Bank understands small business better than anyone else is because it started as a small business. It is an absolute privilege to work with the Judo technology team, they are the best of the best and make magic happen every day.”

Judo Bank
Alex Twigg