Brokers will play a key role in the group’s expansion into two new areas of expertise, said Judo Bank’s third-party head.
The specialist small business bank is opening two new areas of expertise for its lending operations: agriculture and health.
Judo has laid out a growth strategy, including expansion into the country through new regional centers, and plans to expand its network of brokers, as outlined in a slideshow from last week’s Investor Day presentation.
George Obeid, chief third-party officer at Judo, told The Adviser that brokers will become important as banks move into new areas of expertise.
“As we build and expand these segments, it’s our engagement with the broker community that’s important,” Mr Obaid said.
“So for healthcare, this has been well developed in this space and will continue to grow and [we’ll] Do business with existing networks. But in addition to that, we will be working with new brokers who specialize in these areas. “
The same applies to agriculture and remote areas, he added.
“While some of our existing networks cover these regions and agribusiness, particularly in the asset finance space, as we look to expand into these areas we will be looking for and supporting prime brokers who have a role in this space growth,” Mr Obaid said.
Judo’s agribusiness is still in an “expansion phase” with more information to come.
Mr Obaid added that the bank had received positive broker feedback on its expansion into the space and region.
“Our planned growth across regions is being supported by the brokerage market, who sees this as a real demand for judo proposals in the agribusiness sector, mainly served by major banks,” he said.
Judo currently has around 1,000 accredited brokers – up from around 900 at the end of December.
As of December, about 75% of Judo’s loan book came from brokers.
When the bank released its half-year results in February, CFO and deputy chief executive Chris Bellis told The Adviser that the bank believes brokers currently contribute around 30-35% of all flows to the SME economy.
He believes that this ratio will rise to 50% in the next three to five years.
Mr Obaid agreed, commenting: “Over the past five years, we have seen growth in the judo and broker value proposition, broker community and broker traffic. We do see this continue to increase.
“We see Judo playing a key role in supporting this growth and supporting the broker community.”
The bank’s investor slideshow does note increased competition, as major players have signaled their intention to dive deeper into commercial lending.
Things have changed since Judo was launched in 2016 to address gaps in the SME lending market. Last year, it estimated the unmet need for SME credit at about $120 billion.
But Mr Obaid is not worried about increased competition from major players.
“Our broker value proposition is very differentiated and purely focused on working with experienced brokers who have demonstrated expertise and capability in the market to provide quality SME loan opportunities to our target lending markets,” He said.
“It’s really about working with an experienced broker with an experienced banker, which will give you greater efficiency and improved processes.”
[Related: Almost two-thirds of SMEs struggling to secure funding]