Avenue Bank puts digital pricing and profitability firmly in the centre of its go-to-market strategy
There are plenty of positives to being a traditional financial institution. Decades of trading mean brand awareness is typically high, and in the main – with one or two notable exceptions– deep trust has built up with customers.
The downside, of course, is that those traditional institutions are constrained by ways of working that have evolved from a pre-digital age, legacy processes that are in place because ‘we’ve always done things like this.’
Significant change is overwhelming, daunting, and often put off until it’s impossible to ignore.
Over recent years new entrants have emerged into the market, and, unconstrained by legacy, they’re able to build a way of working that’s ideal for the 21st century.
One such newcomer is Australian startup Avenue Bank, a digital specialist bank for small businesses.
The brainchild of Founders Dale Hurley and Colin Porter, Avenue Bank has a board and leadership team with vast experience within the Australian banking scene and tech startups and small businesses. CEO George Confos spent over 20 years in senior roles at Commonwealth Bank, while other executives list Commonwealth Bank, Westpac, Telstra, Accenture, IBM, Xinja and the NSW Government among their previous employers.
Collectively, they are relishing the opportunity to build a new business bank from the ground up – one which is focused on helping an often-neglected sector in Australia – small businesses.
“We often talk at Avenue about starting with a blank sheet,” says Chief Product, Operations and Marketing Officer Peita Piper, herself a founding employee of Ubank, joining at conception with six other leaders.
“It’s been a privilege to develop this new greenfield strategy without being constrained by any of the legacy issues banks typically have. We’ve been able to design products and select the best-of-breed technology to meet our needs – and the needs of our target customers.”
Building a bank – key technology ingredients today?
As a cloud-based, digital product-led business, Avenue Bank’s mission is to deliver new, innovative ways of servicing business customers – and cloud technology is critical to doing just that.
In addition to the core banking platform, origination platform, and CRM that every bank needs, the Avenue team identified that a digital pricing and profitability tool needed to be a central component of its tech stack, too. Typically, pricing and profitability optimisation is done outside the core banking platform, origination platform and CRM, so specialist tools are required.
“Our go-to-market strategy involves business development managers (BDMs) working with referrers and customers, and we want to empower our BDMs to have the capability to price directly with these customers,” says Piper.
Piper also suggested that “Part of their proposition is speed and efficiency – we don’t want our customers to have to wait a long time for approvals. We want our BDMs to have the power to price the deals based on ROE [return on equity] at the time of the deal and get the deal done.
“The ability of our BDMs to price quickly and efficiently, and deliver products to our customers, is fundamental to our brand proposition,” says Piper. “It’s an absolute game-changer.”
Avenue Bank engaged Brilliance Financial Technology to run a proof of concept (POC) on its fourth-generation pricing and profitability platform, DPX.
Piper says the POC was an excellent opportunity to test and learn, and prove the capability.
“Sometimes, these things seem abstract, and by running the proof of concept, we were able to show the executives what the platform can do and, more importantly, how it’s going to enhance the business.”
“We had a baseline of pricing and calculation methodology that we wanted to test, and we were able to test whether that methodology was fit for purpose.”
The project successfully demonstrated a multitude of benefits throughout the business.
“As well as the immediate benefits in terms of pricing and profitability, there are a lot of downstream benefits too,” says Jy Lazo, Head of Product at Avenue Bank.
“It enables us to work more effectively and empowers our sales team while still maintaining the right controls.
This enhances our internal culture and allows us to quickly reach the best outcomes for our customers.”
Key benefits of digital pricing and profitability
In addition, by using digital pricing and profitability tools, Avenue Bank can operate with a much leaner team.
“We can reduce the reliance on credit and operations to perform exceptions because we’re empowering more people and distributing the workload a lot more – it streamlines the processes and workflows,” explains Lazo.
In addition, says Lazo, the platform can apply logic to different parts of the pipeline to ascertain the likelihood of a conversion.
“From there, we can extrapolate what the value is worth at every stage,” he says. “From experience, that is typically an area that’s always been quite grey.”
With the technology in place, Avenue Bank is now focused on successfully launching to the Australian market and delivering on its mission to bring new and flexible ways to free up cash for small businesses. The business was granted its restricted licence earlier this year and aims to raise further capital to fund its full licence in 2022.
“We’ve got our product rollout strategy, and we’ll continue to launch new and innovative banking products for small businesses,” says Piper. “We want to be a business bank that stands next to our customers and supports them in every way possible.”
Having the opportunity to build a new, modern bank from the ground up is one that many in the industry dream about.
And, by having pricing and profitability at the centre of its strategy, Avenue Bank is firmly focusing on delivering the best for both the business and its new raft of customers.