Business lending specialist Judo Bank has begun work on a “multi-year roadmap” for launching new products and services in the payments market, according to job advertisements posted on employment websites in the last week.
The Melbourne-based bank, which currently does not offer transaction accounts or credit cards, last week advertised on the Seek website for a “product owner” to manage the implementation of the company’s payments strategy.
According to the job description, the bank is looking for candidates with deep knowledge of payments processing to define the bank’s “next generation payments capability”.
Judo is currently focused on marketing loans and asset finance to small and medium businesses and partly funds its lending by selling term deposits to retail customers.
The new payments role is significant in strategic terms for Judo because senior executives have consistently downplayed the urgency of developing a payments capability at the bank.
At the company’s annual investment seminar on 11 May, Judo’s chief operating officer Lisa Frazier hosed down the expectations of one investment analyst that the bank might launch a transaction account in the next 12 months.
“Transaction accounts is not (on the radar) in the immediate future,” Frazier told the analysts’ briefing.
“We believe there is a lot of advantage for us to leverage open data before actually taking on the costs and operational risks of a transactional account.
“So, we would need to continue to evaluate that with our customers and their needs before we actually started down that journey.
“We have not done that analysis of what it would cost to execute a transaction account at Judo.”
Frazier did not comment on the prospect of Judo launching a merchant services offer for business customers.
The development of new software-driven technology is expected to dramatically lower the entry costs for new acquirers in the merchant payments market.
As Judo builds its SME customer base through relationship banking, the economic incentive to add a merchant acquiring service is likely to increase.
However, any move into the acquiring market would require the bank to have established a reliable transactional banking capability.
Frazier also told the May seminar that the bank was not likely to be introducing new lending products in the short term, but would be focused on marketing existing business credit products to new SME industry segments such as agribusiness and health care.
The job description for the new payments role at Judo seems to indicate the bank will be highly selective about its future as a payments player.
It calls for the successful candidate to “evaluate opportunities using (product) discovery techniques to reduce uncertainty and ensure only the most promising opportunities get fully built.”