Banjo’s Chief Executive Officer speaks with FST Media about how to build engagement with a rising millenial customer base.

FST Media: What are your key priorities for the next 12 to 18 months?

Colliver: Our key priorities are to become an embedded credible funding option for small and medium business owners across Australia when they wish to grow their business. Our job is to combine the power of data with the passion of business owners. We wish to become the category killer for short-term working capital requirements of small businesses across Australia.

In the US and UK, marketplace lending has converged rapidly towards mainstreet banking due to the widespread acceptance by customers of the benefits of online lending. The industry remains nascent in Australia, and we have significant work ahead of us to build firstly customer awareness around the speed and convenience of our offering and secondly educate investors about the potential diversification benefits of our direct lending fund.   

FST Media: What is the next step in your capital raising process and how significant has this been in terms of product development and execution?

Colliver: We have created a direct lending fund called The Banjo Small Business Loan Fund offering corporate and wholesale investors a private credit strategy in a large cash flow rich pool of diversified small business loans offering a fixed income coupon return of 8 to 10 per cent per annum. 

Over time, we wish to lower our weighted average cost of capital by diversifying our funding sources and conduct further capital raisings to support our growth strategies. Geographic expansion and product development will be the primary purpose of any future capital raising. 

FST Media: What are your thoughts on the increasing prominence of Peer-to-Peer (P2P) lending – do fintechs like Banjo represent a threat to banks or an opportunity for innovation in the financial sector?

Colliver: After the Global Financial Crisis of 2007-08, large banks globally focused on the strategic imperatives of risk management, and adapting to a new regulatory compliance and capital regime. Cost reduction initiatives tackled flat line revenues in a low consumer and business growth environment. In every other financial shock, the banks could rely on long tested means and methods to respond to a conventional value chain, and they did again. At the same time, there has been a global trend of a growing disparity between banks and small businesses whereby demand for small business loans has exceeded supply; more onerous restrictions have been imposed on borrowing arrangements; the application takes too long and processes are too difficult. 

It is also evident there has been a growing spread differential between home loans and small business loans, with small business loans being charged 200 basis points over the average cost of a home loan. 

It is completely natural and expected that new entrants leveraging technology to focus on taking banking services to clients in a relevant and convenient manner would fill the gap left by banks. Fintechs like Banjo represent both a threat and an opportunity for the financial sector. Over time, there will be convergence between alternative financiers and traditional banks driven by common goals and customer needs. At Banjo, we believe government, industry bodies, data providers and banks can work together to improve both access to capital and transparency of funding for Australian small business. 

FST Media: How do you encourage a culture of innovation in your team?

Colliver: At Banjo, we are constantly prototyping and evolving every aspect of our interaction with customers. The business and technology team are located next to each other, and every morning they gather around our scrawl wall where we debate and brainstorm our efforts to optimise the customer experience. We have a culture of experimentation, measuring, adapting and executing in 14 day cycles. We believe that having co-located experts working together in a transparent manner will empower them to make a diference and this leads to constant evolution. 

FST Media: How is Banjo harnessing the power of social media to engage with a rising Gen Y customer base?

Colliver: We like to call them ‘the millenials’. They want their banking anytime, anywhere and on any device (mobile, tablet or PC). Therefore, social media channels like Facebook, LinkedIn, Twitter and conventional above-the-line channels like radio and “catch up” television will be utilised.

Interestingly, the majority of small business owners are Generation X and Baby Boomers, and accordingly, we need to employ the marketing channels that engage these demographics as well. We need to work alongside the small business owners and trusted partners like bookkeepers and accountants.

FST Media: How wiil you leverage data insights to simplify the lending experience?

Colliver: Demystifying the lending process through transparency is key. For instance, Banjo Score® is a powerful diagnostic engine for assessing the risk profile of small business owners and they are rewarded for improving financial performance. By linking their accounting data electronically, we can obtain a holistic view of the clients business performance in real time and provide more granular “price for risk” decisions.

At Banjo, we provide each client with a customised dashboard displaying their current and historical loan details.

In the short term, we would like to share with our clients some of the performance insights of their business with simple educational tips on how to improve certain cashflow drivers. The better the financial performance of their business, the lower the price. At Banjo, we wish to help our customers achieve their goals.

FST Media: What does disruption mean to you?

Colliver: Many of the global banks are faced with the struggle of retooling legacy technology systems; adapting to regulatory and capital regimes; and melding the ‘old’ with new digital technology platforms.

The building blocks of the internet of things (IoT) have really gained traction over the past five years to improve information connectedness, scalability, speed and drive the costs of technology stacks down. At Banjo, we fully embedded the benefits of the IoT into our business model to deliver an innovative new working capital facility approved and delivered in a completely new simple manner. We built a value proposition across product type and user experience that is consistent with helping the customer complete their daily tasks efficiently – where and when they want to. For this reason, it is disruptive.

FST Media: Every leader has a legacy they wish to be remembered for, what is yours?

Colliver: My sole focus is supporting small and medium business owners across Australia to grow their business and achieve their goals. To achieve this, I need to focus on the present and a series of daily actions. Any discussion about legacy will be decided by others at some point in the future.