The Australian Prudential Regulation Authority (APRA) has announced that it has granted Judo Bank (formerly Judo Capital) a licence to operate as an authorised deposit-taking institution (ADI) without restrictions under the Banking Act 1959.
Following APRA’s announcement, Judo chairman Peter Hodgson commented: “We are delighted to be granted an unrestricted banking licence, helping to solidify our position as Australia’s first fully licensed challenger bank dedicated to small and medium-sized business lending.
“To achieve our full licence in such a tight timeframe, we worked closely with APRA to meet the strict conditions necessary for a licensed bank, including the strength of our business model, and governance policies and principles – a process that involved substantial work by the team since we first applied in May 2018.
“On behalf of our investors and Judo team across Melbourne, Sydney and Brisbane, we are delighted to have been granted this full banking licence, following new legislation that has opened up the industry to much needed competition.”
Mr Hodgson said that Judo would be launching deposit products, starting out with term deposits and notice accounts for business, consumers, SMSF and wholesale depositors.
“We have been thrilled with the support we have received from the business community since we launched Judo in April 2018,” he added.
“The ability to now offer term deposits and, accordingly, to change our name to Judo Bank will help drive growth, and provides an opportunity for businesses and the broader community to support business funding at competitive rates.”
Mr Hodgson concluded: “As Australia’s first dedicated business bank, we want to be champions for small and medium-sized businesses – the most dynamic sector of the Australian economy but one that has been often ignored or taken for granted for too long.
“I want to thank our customers, brokers, investors and strategic partners for the confidence they have shown in Judo and our team.”
Judo’s co-CEO, Joseph Healy, recently also revealed to Mortgage Business that the SME lender, which officially launched in March 2018, was awaiting its imminent receipt of the ADI licence that has been part of the lender’s plans for over three and a half years.
He said: “From day one, when we decided to build Judo, we built it with the intention of eventually becoming a bank. We believe that – notwithstanding the higher regulatory cost associated with being a bank – there are a lot of other benefits that allow you to grow and offer businesses a greater range of options than we would be able to offer if we were a non-bank lender.”
Mr Healy added that retail deposit offerings would help reduce its reliance on wholesale funding.
“You can have a mix of different types of borrowing in order to lend,” he told Mortgage Business, “and the deposit market in Australia is a huge market, and we see it as an attractive way in which to fund our business, together with wholesale funding lines.”
“The deposits will just give us the ability to be able to scale the business faster than would otherwise be the case,” he added.
The co-CEO emphasised, however, that the bank will “only lend to small and medium-sized businesses”, as is the case now.
Judo Bank is the latest neobank to receive a banking licence, with Volt Bank receiving a licence in May 2018, and Xinja Bank authorised to operate as a restricted ADI in December 2018.
86 400 has also applied for an ADI licence, which it expects to receive in the coming months.
CEO of 86 400 Robert Bell congratulated Judo on their receipt of the banking licence.
“Congratulations to the team at Judo for passing such a significant milestone. More banks means better choice and that’s great news for Australians, who have long deserved better products and services than those offered by the big four banks,” he said.
“86 400’s full licence application is progressing well, and we look forward to making an announcement of our own in the not-too-distant future.”
CEO of Xinja Bank Eric Wilson also congratulated Judo: “We are delighted for the whole team at Judo Bank that they have passed this well-deserved milestone.
“It’s great to see more choice for businesses in Australia with a new business bank.”
[Related: APRA grants banking licence to neobank]
If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.