Avenue Bank: Launching a
specialist SME bank with
Cloud for Banking

Goal

Become a fully licensed bank.

Products used

Cloud for Banking

Setting the scene

Avenue Bank was founded as the answer to a broken market segment: bank guarantees for small to medium sized businesses.

For new banks establishing themselves, there’s heightened competition and several hurdles to manage. The main being finding investors and securing capital and working with regulators – in this case, APRA – who are rightfully conservative when handing out licenses making this feat even bigger.

Nevertheless, their mission was clear: to cater to an unloved audience that massively contributes to the economy but is very often met with difficulties in one of their first steps as a business – obtaining a bank guarantee to secure their new lease. For Avenue Bank, it was now a case of becoming a fully licensed bank and getting this executed to enable SMEs and their goals.

The problem

An ongoing multi-mindset juggle to launch

Becoming a fully licensed bank is an arduous journey. It requires the business to implement the framework and demonstrate compliance with the necessary regulation, while simultaneously pacing the investments required to develop the customer proposition. Additionally, investors need to be comfortable with this balance during a time when the business doesn’t have any revenue.

From the start, Avenue Bank understood they needed a core banking solution that would give them both the best chance to be granted a full license and to innovate the bank guarantee according to their product strategy.

Service model, infrastructure reliability and cost predictability were also key components of the decision Avenue had to make to choose its core banking solution.

However, Avenue Bank was only reaching its first birthday when the post-pandemic interest rate hikes caused a big shift in a previously capital and liquidity-rich market. All new businesses now needed to justify budgets and refine the strategy more extensively, and Avenue understood they needed to demonstrate their ability to influence and control costs to investors in this tightened environment. The pressure was on.

The solution

A customized Cloud for Banking solution that the regulator approves of

Avenue Bank chose SAP Fioneer’s Cloud for Banking (C4B) solution because of its reputation for reliability with the regulator. This was instrumental in the business being granted a restricted banking license (RADI) in 2021 and is now part of their backbone as a fully licensed bank.

C4B was established on Avenue Bank’s platform with the relevant customization to ensure it fits with their business model and product. Once in place, it offered consistency and stability allowing the bank to concentrate on obtaining its full banking licence prior to launch.

After product development and testing, plus experience in the running of the system with a small number of customers, it was evident their existing support model could be refined and the system infrastructure could be further reviewed and customized.

For example, they recognized that more flexibility, reactivity and higher performance levels were required for the post-launch system to serve more customers in a live environment.

The initial three-year contract anniversary was the opportunity to reflect these learnings in a new and updated contract with SAP Fioneer. SAP Fioneer and Avenue Bank redefined both technical and support requirements to introduce some flexibility while enabling better cost efficiency in the long term.

The reliability and stability of SAP Fioneer’s Cloud for Banking platform has given us confidence to launch our innovative bank guarantee in market with approval from the Australian banking regulator.

Nicolas Parfait, CIO, Avenue Bank

The outcome

A game-changing product goes live and confidence continues to build

The seal of approval with the guarantee you can bank on

With a strong core banking infrastructure that has been adapted to their innovative business and product, Avenue Bank were able to prove to the regulators their capability in providing a digitally-enabled bank guarantee and have launched with a full banking license (ADI).

They’re able to offer their customers a fuss-free bank guarantee in as little as 24-hours, instead of weeks, without the need for lengthy credit assessments. They’ve successfully reinvented the bank guarantee for Australian businesses needing to secure a new lease.

Peace of mind for the next phase

With the Cloud for Banking solution and the end-to-end managed services support being adapted to meet Avenue Bank’s needs as a specialist business bank with a unique product, they can continue to confidently onboard new customers.

The refined SLAs with defined performance give Avenue Bank peace of mind that they’re able to meet their customers’ needs as more stresses are applied to the platform. They have the committed support from SAP Fioneer to be reactive, to problem solve, maintain high performance during any incident and to mitigate risks to the degree that they feel necessary and suitable.

Strategy will only get stronger

With the bank in full flow and costs and infrastructure in a consistent, reliable state, Avenue Bank can consciously measure its success. This will allow a data-led innovation strategy of the product offering and a holistic decision-making process when choosing where to invest as they receive customer requests and identify areas of improvement or revenue growth.