Exclusive interview between CREALOGIX and Guy Callaghan, CEO of Banjo Loans, on the SME Banking landscape

Exclusive interview between CREALOGIX and Guy Callaghan, CEO of Banjo Loans, on the SME Banking landscape

CREALOGIX commissioned a major SME Banking survey, speaking to Finance Directors at SMEs in the UK, Germany and Switzerland to ask them what they value and require from their banks. The outcome is a highly interesting report describing what SMEs expect from their bank, industry trends and opportunities for banks to retain and grow their SME customer-base.

To access the full SME banking report, you can download it here.

To access the APAC mini report, you can download it here.

CREALOGIX spoke with Guy Callaghan (pictured), CEO of Banjo Loans, a leading fintech SME lender, on the research piece to get his exclusive view on what this means for the Australian market. Did you know that 90% of SMEs want to increase the digital touchpoints with their bank? Learn more in the freshly conducted interview.

Business financing and the importance of multibanking

One of the most important issues in the last two years has been financing for SMEs. CREALOGIX spoke with Guy Callaghan, CEO of the Australian challenger Banjo about the changes to the financing landscape in Australia.

Why has Banjo focussed on providing financing to SMEs in Australia?

It is a large market – there are roughly 2.4 million SMEs in Australia – and it is currently under-served by the main banks. As can be seen elsewhere in the world, the larger established banks have largely focussed their attention on the retail and larger corporate markets. Often, SMEs fall between the gaps as banks try to address the growing demands in the retail market and satisfy the larger corporate customers. As a result, challenger brands are growing as alternative finance and banking solutions to meet demand.

Why do you think there has been less focus on SME banking in the past?

It is harder to gain data on SMEs. Compared to larger corporates which have information posted on the stock exchange, it is much more of a challenge with SMEs. Larger banking legacy systems aren’t always capable of extracting data from the right range of different sources to understand the financial position of a company.

How does the digitalisation of processes help with business financing?

Many companies use credit cards and personal savings for smaller amounts of funding and at the heart of that is the need for a quick solution. While established banks have lengthy processes to gather data and manage an application for funding, the need for that funding is more immediate. Often what SMEs need is working capital to grasp a new opportunity and by the time their application is approved, the opportunity has been missed.

Does a digital solution mean that SMEs are less likely to build working relationships with banking and finance providers in the future?

On the contrary, technology can bring providers closer to SME customers. The way to build relationships isn’t to always insist on meetings but to engage with SME owners where it is most convenient for them.  Efficient data extraction and automation can speed up the application process considerably. At Banjo, this can take 10 minutes to complete online and this is followed by a call (telephone or video conference). For larger transactions, it’s definitely beneficial to have a more personal interaction via a call. In some instances, while a digital process is simpler, it may be harder for SMEs to articulate why the funding is needed without a human interaction to provide clarity. However, it’s also important to have smaller touchpoints such as instant messages for quick queries and even chatbots to support with routine enquiries and help with the application process.

How important is the user experience when the relationship is managed digitally?

A positive UX is essential, and it’s an integral part of the process, not an added extra. UX is what attracts new customers and it means a simple, clear journey for customers to complete their tasks and get what they need. Established banks find this a challenge because often a bank’s website has been built piecemeal and an applications may have to travel through multiple systems that aren’t connected to each other. New entrants definitely have the advantage in building each journey from scratch, but banks could take this same approach because even if fixing the back end takes longer, the important thing is that the customer doesn’t experience this friction. This really highlights the importance of UX because it is what the customer experiences of your organisation.

Did the pandemic change the way business financing was delivered in Australia?

There have been some changes but perhaps not as dramatic as seen in countries across Europe where challengers took on the task of delivering support to businesses. In Australia, the government engaged directly with established banks to develop a funding plan, including the SME guarantee scheme in its various iterations. These schemes were not often accessible to challengers to support, and as they were skewed towards the banks this approach never really achieved the goals it set out to do – support SMEs with easy funding. The resulting solution was slow and restrictive and that’s why SMEs are now turning to organisations like Banjo that offer a digital solution to financing applications.

Where do you think the future of digital banking lies for SMEs?

Facilities such as open banking and multibanking are going to become essential. Specialising in a specific area brings efficiency gains for challenger organisations such as Banjo, but of course there is more to a business than just financing. What’s likely to happen is that there will be more partnerships with other challengers offering a similar premium digital solution and this ecosystem of niche players will become a viable alternative to the more traditional full service banks. In this instance, as with UX we should look not at the process but the end result. A convenient dashboard that integrates all elements of the SME’s financial life from different specialist providers all offering a positive UX will mean happy customers – and that’s what we all should be working towards.

To access the full SME banking report, you can download it here.

To access the APAC mini report, you can download it here.

For more information, please contact CREALOGIX at [email protected]