The Bank dedicated to Aussie businesses has arrived

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.

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." 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.

Small business bank Judo is planning to boost its lending by another $2bn over the next year, and expand its Australian footprint, co-CEO Joseph Healy says.

Mr Healy was speaking on Thursday as Judo announced it had made more than $1bn in loans to small and medium-sized companies since getting its full banking licence in April last year.

“Our goal over the next 12 months is to take our lending up to well above $3bn,” he said.

A former head of business banking for National Australia Bank, Mr Healy said the bank was carving out a niche in the small and medium business-lending sector, fulfilling a need in the market as the big banks pulled back.

“The banks have shifted their attention away from SME lending largely towards residential mortgage lending over the last 10 years,” he said.

“SMEs are not getting the attention they deserve from the traditional banking sector. “We estimate that there is unmet demand for credit from the SME sector of $90bn at the moment.”

Mr Healy, who started Judo after a 30-year career working for major banks including NAB, ANZ and Citibank, said this trend had been accelerated in the wake of the Hayne banking royal commission, which had made the big banks even more conservative in their approach to lending.

Mr Healy said Judo had boosted its staff from 70 in June to more than 165, with plans to hire more experienced bankers as demand grows. Based in Melbourne, the bank has offices in Sydney and Brisbane with plans to open in Perth and Adelaide this year.

Beneath the civilised veneer of the banking system, a war is being waged. Not between the big four incumbents, but between them and the upstarts who are chipping away at the market they have held captive for so long. If you want to know what an aggrieved bank customer looks like, look no further than Stewart Koziora.

The hospitality entrepreneur and property developer has just had all of his accounts closed by NAB after daring to move a multimillion-debt facility to a competitor that offered a better rate.

“It was a nightmare,” he said. “Just pig-headed behaviour, I am shocked at how they treated me.”

Mr Koziora employs over 100 people and his business interests, which include popular Melbourne CBD bar Fathers Office, turn over $20 million a year.

After a 25-year relationship with the bank he shopped around for a better rate and found one with competitor Judo. Retribution was swift.

Mr Koziora received an email from his business banker at NAB who told him they would sever ties immediately.

“Our business model is not built of split banking,” the email read. “We have made enquires (sic) to other segments in NAB and there is no capacity for a transfer of the accounts especially given the account conduct over the years and the limited appetite to the industry.”

Beneath the civilised veneer of Australia’s banking system, a war is being waged. Not between the big four incumbents, who have dominated the landscape for so long, but between them and the upstarts who are chipping away at the market they have held captive for so long.

Judo is an example. Founded by former NAB bankers Joseph Healy and David Hornery, Judo pitches itself as an expert in small to medium enterprises (SME).

In addition to co-founder, Mr Healy has also played the role of chief troublemaker for his former employer, saying the banks “have forgotten how to bank small business.”