More innovation needed in SME market: Judo CEO


According to the head of Judo Bank, more needs to be done when it comes to lending to SMEs, but regulations will have to adapt to rapidly changing technology.

Speaking at the recent Australian Banking Association (ABA) banking conference, Judo Bank Chief Executive and Co-Founder Joseph Healy spoke about the state of small business lending.

Regarding fintechs, neobanks and challenger banks, he commented that “the language and labels can be quite confusing and make it difficult to review this industry”, but there will be more developments to come.

“We are going to see a lot more innovation and I would like to see more innovation around the SME economy. I think there’s a lot of innovation in consumer economics, which is fantastic. But there is a lot more to do,” Mr. Healy said.

“And I think the next generation in five [years’] time, might have might be talking about a very different narrative than the one we’re talking about. Not replacing what’s here, but building on top of it, and I think that’s quite exciting, actually.

Mr Healy also noted that regulation and legislation have not kept up with innovation, which he called a “real problem”.

“This is a problem because it can constrain and frustrate innovation and make the innovation economy more difficult to crystallize, but it also creates an arbitrage within the financial system, where two companies – one thats regulated and whichis unregulated – basically do the exact same thing, he said.

“And you start creating… an imbalance in the financial economy, which I don’tI don’t think that’s good.

He called for a “cleaner” regulatory environment, with consistent laws and regulations that keep pace with innovations, in the interests of fintech investment and growth.


Judo had to find much of its funding for its initial fundraising overseas because local capital markets had not been open to what they saw as ‘untested and risky business models’. , said Mr. Healy.

He also said there should be more tax incentives for innovation, to support new developments in financial services.

“It’s not something that just new entrants coming into the market respond to,” Healy said.

“There needs to be a public policy framework in which all of this works and a real movement behind supporting financial innovation because we can achieve great things in my view.”

Last year, Judo estimated that unmet demand for SME credit was around $120 billion.

But since then, the lending industry has changed, Mr. Healy recently explained, with increased competition from two of the major banks.

Judo predicted that business loans would increase by 8.75% in 2022.

“We believe that the SME economy is of crucial importance for the economy in general and I don’t think anyone would disagree with that, but it is high time that the SME economy receives the service it needs. the banking system needs and deserves,” Mr. Healy said.

Judo was launched in 2016 to fill a gap in the SME lending market, marketing itself as a specialist bank for small businesses.

Mr Healy commented that the “art of SME banking” had been lost among its main rivals.

Prior to judo, he held senior positions with NAB, ANZ, Citibank and Lloyds. At NAB, he had been Managing Director/CEO of the Merchant Banking Division.

“Industry…has been heavily industrialized. I myself was a big part of it, because I ran a large merchant bank for eight years, and I was part of it,” he said.

“You increase the costs, you outsource things to foreign countries because the costs are lower. But in fact, what you’re really doing is disqualifying a core competency within the organization.

Recently, Judo predicted that brokers will participate in half of all small business financings over the next three to five years.

Currently, the broker channel accounts for around 30-35% of all flows in the SME market, Chris Bayliss, Judo’s chief financial officer and deputy managing director, told The Adviser.

The bank listed on the ASX in November.

[Related: Tasmania rolls out more SME COVID support]

More innovation needed in SME market: Judo CEO

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Last update: March 22, 2022

Posted: March 23, 2022

Sarah Simkins

Sarah Simkins


Sarah Simpkins is the managing editor of Mortgage Business and The Adviser.


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