Bringing the Humanity into SME Banking
Consumer banking is well and truly entrenched into the world of self-service, online, faceless, commoditised financial services products. When it comes to SME banking, this segment in which businesses can range from a one-person florist to a construction company with revenues of $45 million, a counter trend is emerging. Bringing the humans and humanity into SME banking is being led from an emerging, unexpected sector – fintech and neobanks. As an HBR article from April, 2020, entitled ‘A Way Forward for Small Businesses’, stated ‘This is a time to be human with people.’ In partnership with the Trans-Tasman Business Circle, The Growth Activists recently sponsored an online event with the two Co-Founders and Co-CEO’s of Judo Bank, Joseph Healy and David Hornery. Having raised a total of $770 million in equity over three rounds, demonstrates the confidence investors have in this sector, particularly during a time of volatility with the existing Big 4 in Australia. But this success has not diluted the humanity nor the humility against which the bank measures its success. Bringing the Humanity Into SME Banking The Founders Vision ‘We felt there had been a dehumanisation of relationship services from the banks to the customers,’ says Joseph Healy, commenting on what he called the industrialisation of the traditional banking model. ‘In the SME economy, in particular, relationships still matter.’ For any SME that has attempted to navigate the structures of traditional banks, this would be a refreshing stance for a challenger SME bank to take. This is clearly highlighted in their mantra – Judo Bank is a challenger bank purposefully built to make it easier for Australian businesses to get the funding they need and the service they deserve. The Connection to the Customer Healy states, ‘People more than capital and more than technology was going to be absolutely critical to our success.’ And this has been clearly demonstrated with their commitment of moving from 60% to 75% of their staff to be client-facing. He continues to state that now, more than ever, banks need to know and understand their customers. He states, ‘Nothing beats sitting across the table from the customer and just going through the things that they should be thinking about, watching their body language to make sure that they are on top of things, and not sticking their head in the sand.’ With SME’s (less than 20 employees) accounting for 35% of gross domestic product and employing 44% of Australia’s workforce, this is not an insignificant sector. One in ten small business owners wants to see added value in the relationship with their bank, according to the 2019 SME Banking Insights Annual Report. Removing a perceived barrier of access to that relationship is key for Judo Bank, ensuring that the Bank recruits talent that is committed to banking and the traditional relationship values that drive success for both the Bank and for an SME. The team that has been built at Judo would agree, as over the last 3 years and with a team of 250 people, only 3 have left. Establishing a New Ethical Benchmark ‘We are committed to banking as a profession,’ states Healey. The question is not a new one, with an article published over a century ago in ‘American Banker’ raising that question: Taking into consideration the important functions performed by the banker, his influence in business and industry and the necessary intellectual and moral equipment to make banking a success, is it not time to assign the vocation of a banker a place among the professions? As ethics and responsible corporate behaviour accelerate to the top of business agendas, Judo Bank’s commitment to being a leader in ethical banking behaviour will be powered by a new stream of ethically-driven Millennials and Gen Z’s as they pursue their business interests and seek to align with like-minded businesses. ‘We want people who are committed to banking as a profession who have committed to the bank and finance ethos and the ethical standards that are critical to any profession. And we want people who are proud to be bankers and who are, and can, demonstrate that they are not just salespeople are pushing products, but they’re deeply, deeply customer-centric,’ says Healey. Judo Bank’s commitment is clear. Every person at Judo has signed and is committed to the Banking + Finance Oath. Commitments have also been made for team members to complete the Chartered Bankers course through FINSIA. What next? Judo Bank is clear that it is never going to be the biggest in Australia, and it doesn’t want to be the biggest. What is very apparent is that Judo Bank is determined to become the best SME bank in the country, built on solid, ethical principles, and in doing so is hoping to answer that 100 year old question. States Healey, ‘I’ve got the appetite to take on the giants in the industry to build a new bank. That’s going to be a great legacy that we are going to feel really proud to be part of.’ SME’s around Australia can’t wait.
When CEOs Become Activists
Why more business leaders are putting Purpose first. There was a time when no CEO in their right mind would dare make a statement that risked customer alienation. Back in 1990, when Michael Jordan was asked why he failed to endorse a local black candidate running against an openly racist incumbent, he was infamously attributed as saying “Republicans buy shoes too”. Even though it’s never been categorically proven that Jordan said this, the quote stuck. For years it was upheld as an exemplar for business leaders to heed. But times have changed. As the most progressive global organisations become increasingly purpose-driven, their leaders are also taking a more public stand on the issues that align with their companies’ values. Topics such as gender, race, sexual orientation, religion, immigration and the environment are no longer off-limits. Start With Why The primary driver for CEO’s becoming increasingly vocal on controversial topics is the evolution towards purpose-led business strategy . This business approach acknowledges that the corporation has a responsibility not just to shareholders, but to a broader group of stakeholders. These stakeholders include customers, employees, suppliers, local communities and the environment. This empowers the CEO to advocate on behalf of a larger group of stakeholders, and as a result to address a broader group of topics that affect them. There is also the fact that CEO’s understand that the general public expect more of them, and the businesses they represent, than ever before. The 2019 Edelman Trust Barometer demonstrates that trust in business sits at 56%, higher than trust in government or media which are at 47% each. This makes it clear to CEO’s that there is an expectation that they deliver on the trust invested in their organisations. This sentiment is particularly strong with influential millennials. 47% of them say that CEO’s have a responsibility to speak out on social issues. And 56% say that the imperative to be vocal is much greater now than in the past. Millennials are also more likely to buy from brands helmed by CEO activists and to stay as loyal employees with CEO activist bosses. And there is the growing frustration that governments do not make fast enough progress on key issues. Political gridlock, slow bureaucracy and failure to represent constituents are amongst the reasons business leaders are stepping up to lead public discourse. CEOs are using their positions to raise awareness for the causes requiring attention. And they’re wielding their economic power to influence policies and legislation. When CEOs Become Activists 3 Activist CEO’s Advocating with Purpose and Impact Marc Benioff – Salesforce Benioff has made headlines over the last few years, weighing in on topics ranging from taxes assisting the homeless in San Francisco to gun laws. But his most high-profile foray has been in support of the LGBTQI community. When the state of Indiana passed a controversial law allowing businesses to deny services to same-sex couples, he acted decisively. Benioff threatened that Salesforce would boycott the state completely. Other business leaders joined him and the bill was soon overturned. Benioff acknowledges he represents a broader group of stakeholders, saying, “CEOs need to stand up not just for their shareholders, but their employees, their customers, their partners, the community, the environment, schools, everybody.” His position on activism is that he only advocates for what is important to his people. He says, “My job as CEO is to listen deeply to my employees and customers and to respond to them effectively.” Rose Marcario – Patagonia Rose Marcario has tripled the company’s profits since stepping into the CEO role in 2009. She has also exponentially elevated the brand’s profile through relentless activism. As a certified B Corporation, Patagonia commits to countless courageous initiatives doing good for people and planet. But Marcario’s gutsiest move was to sue the Trump administration for its decision to reduce Utah’s Bears Ears National Monument by 85%. A company statement read: ‘This is not about politics; it’s about protecting the places we love and keeping the great promise of this country for our children and grandchildren. We won’t let President Trump tear down our heritage and sell it to the highest bidder’. When recently asked how the drawn-out legal proceedings have affected the company Marcario replied, “[The lawsuit] has been great for business. We’re going to have the best year ever.” Mark Parker – Nike Outgoing Nike chief Mark Parker is no stranger to divisive social issues. When Nike aired their Dream Crazy ad featuring Colin Kaepernick in 2018, both the media and the public were quick to react. Kaepernick had lost his job as a quarterback at the San Francisco 49’ers and had been deemed ‘unemployable’ by other NFL teams. He had deeply divided Americans by taking the knee during the national anthem to show his allegiance to the ‘Black Lives Matter’ movement. Nike’s decision to support Kaepernick ensured Americans clearly understood on which side of the divide the company stood. The ad ends with the line “Believe in something. Even if it means sacrificing everything”. And in creating the ad Nike was willing to walk the talk. The stock price initially took a hit, and the media fanned the flames of controversy by showing enraged conservatives burning their Nike shoes. But within days the stock climbed to an all-time high. By the end of the quarter, the sportswear giant reported a 10% jump in income , driven primarily by an increase in revenue. Nike’s results proved that taking a strong position can be very good for business. Parker, who approved the ad, defended the sportswear giant’s position. He commented, “There are values that are important to the brand and the company that we’re not going to shy away from. We support the views of our employees, our athletes. And yeah, we will put a stake in the ground and take a stand.” 3 Take-Outs For CEO’s who have embraced purpose and are exploring broader stakeholder advocacy, there are a host of considerations to ponder. Here are three they
