A majority of Australian economy depends on the SMEs with employment size ranging from 0 to less than 200. The statistics from a report in 2019, states that Australian businesses comprise 97.7% of small businesses and 2.2% of medium enterprises. However, the survival of these businesses is comparatively less (approx. 59.6%) than that of large businesses (approx. 85.6%.) This data clearly indicates that SMEs are a big part of the Australian economy and they need assistance to sustain. With the COVID-19 pandemic situation and the lockdown norms, most of the SMEs were unable to operate for some months and hence, were on the verge of shutdown with the lack of financial support.

Another side of the pandemic story is the steady rise in the demand for digital banking. In Australia, digitalization has always seen a positive impact and therefore, digital banking has seen tremendous growth over the years. Currently, the showstopper of digital banking especially in Australia is neobanks. Neobanks have shown the world what it is like to experience 100% online financial experiences with cutting-edge technologies like Artificial Intelligence, Cognitive Automation, etc., and hence gained special popularity in the Aussie businesses.

Recommended read: The Secret Sauce of Neobank Success – An Explanation and Exploration

The major reason for the booming of neobanks in Australia is its lending opportunities for the SMEs. Of course, neobanks have been in the limelight even before the pandemic but the demand has increased due to the new ‘digital’ lifestyle and the need for financial assistance for the survival of SMEs.

How neobanks can assist SMEs?

  • After the cataclysmic 2008 crisis, most traditional banks became cautious in lending businesses especially to the SMEs, affecting them at a large scale. Neobanks, on the other hand, welcome SMEs by aiding them financially, hence helping them grow.
  • Neobanks were established to provide services that most traditional banks provide except that it is faster, robust, and unlike traditional banks, neobanks do not have ‘brick-and-mortar building’ and work 100% online. Therefore, SMEs can now run their businesses without any interruptions or waiting time.
  • Some neobanks also have certain interest rates for SMEs maintaining standard deposits in savings account, therefore SMEs that expect financial growth can earn from these interests. Apart from these, neobanks have no processing fees and paperwork thus making lending process a seamless experience for SMEs.

Can Neobanks really help SMEs?

Yes, it can. Here’s an example of a bank which has emerged to become the first Australian neobank and how we helped this bank achieve its dream. Judo bank headquartered in Melbourne and extending services in Sydney and Brisbane focuses mainly on SME lending. The aim of the bank is to assist the SMEs financially by solving the $900 million funding gap, which had plagued the SME market in Aussie businesses. Major services by Judo bank include business loans and other financial related services. Although, they had a genuine and strong vision, they were in need of a banking system equipped with an agile and robust system.

By carefully analysing the requirements of the bank, Aspire chalked out a proper execution model for the end-to-end implementation back-to-back with Temenos. The offerings included cloud-based requirements like strong core banking platform using Temenos T24 Transact, AWS cloud, providing customer intelligence using Temenos Analytics, Temenos’ Risk and Compliance platform for Financial Crime Mitigation, Temenos Infinity for data-driven and sophisticated front-end, etc.

Execution Model:

Execution Model

Aspire actively involved in the development of Internet and mobile banking platform apart from retail, SMSF, and business products. Some of the features implemented were: strong authentication as part of the FCM for accessing insights and other exclusive features, option to update customer address with proper address validation, analytics, etc.

Another interesting feature which made Judo bank stand out was the 5-step onboarding process, which took less than 5 minutes with the help of self-service origination. Also, the experts at Aspire took full in charge of the UX design for better customer experience and engagement. Aspire also integrated with 3rd party vendors for providing additional features like Equifax for eKYC, Banksight for CRM tool, Xero for GL interface, etc.

A Takeaway

With out-of-box ideas and customized offerings, overcoming challenges like time constraints, lack of communication due to multiple vendor integrations, Aspire successfully completed the project in its first attempt. The bank publically went live in July 2019, raising more than $140 million funds cumulatively from Australian and international investors supported by Ironbridge capital.

With a strong digital platform, Judo bank had a triumphing entry into the world of SME market by gaining the license on time. The bank has managed to distribute loans worth $1.6 Billion and bagged the unicorn status in 2+ years. With the self-service origination feature, the bank is encouraging SMEs to kick-start their business faster.

Currently, the bank is offering lending services starting as low as 250,000 AUD, which has motivated hundreds of SMEs and now the bank is providing a ray of hope for thousands of SMEs having a vision.