Australian Banking Association CEO, Anna Bligh, talks about the key outcomes from the Banking Royal Commission, what the industry is doing to restore trust, and the future of open banking.
Jessica Amir: Hello I’m Jessica Amir for the Finance News Network, at the offices of the Australian Banking Association, with the CEO, Anna Bligh. Anna, thanks so much for having us.
Anna Bligh: Pleasure.
Jessica Amir: So first up, the Royal Banking Commission, we’re in the midst of one of the biggest shakeups that we’ve seen. What can you tell us so far?
Anna Bligh: A Royal Commission is never an easy thing for anyone to endure. And there’ve certainly been some very painful moments for banks, as there has been intense scrutiny on practises. Some of which are in the past, but nevertheless, have exposed things that could be done much better. By their nature, RoyalCommissions focus on misconduct, not conduct. Everyday banks are making many Australians, millions of Australians happy, by giving them their first home loan or giving them business support and business lending.
However, there are things that need to be done better, banks acknowledge that. And I think out of the Royal Commission, Australian banks have a once in a generation opportunity, to reset their relationship with their customers and with the broader public.
Jessica Amir: Speaking about that opportunity. What can we expect in terms of some of the things that banks can do, to restore confidence?
Anna Bligh: Banks have understood for sometime that they have been losing the trust and confidence of their customers, and the broader public. And so prior to the Royal Commission, they weren’t just sitting around idle on this issue. So they’ve undertaken the most significant root and branch review, and rewrite of the Banking Code of Practice. This is essentially a contractual promise that banks make to their customers, about how they’ll be treated, when they’re seeking a product or a service from the bank. How banks will communicate with them and the sorts of protections that customers can rely on.
The Code of Banking Practice is contractually enforceable at law, so it’s a code with teeth. The new code is now completely rewritten and will be fully implemented, in July 2019. So there’s a lot of work for banks to do between now and then. They’ve got to train everyone of their staff and there’s nearly 140,000 of them. They have to change the coding in their algorithms, to ensure that the customer promises they make will actually be delivered, particularly through digital banking.
So there’s a lot of work to do, but it will make a big difference for customers. And I think does present one of those, one of them hopefully, one of a number of opportunities for banks, as I said, to reset that relationship and for customers to feel that in a real way.
Jessica Amir: Turning the page now. Some of the banks are announcing plans, or have announced plans, to divest or sell their wealth divisions. So why, can you tell us that you think they’re doing this?
Anna Bligh: Banks make commercial decisions about the nature and the structure of their business. And some banks have reached the conclusion in many cases, for different reasons that they want to have a different relationship, with those businesses. In some cases they are completely moving out of that business. In other cases they will no longer necessarily be the owner of the product, whether it’s superannuation or insurance. But they will continue to distribute that product and in some cases, they will continue to manufacture but not be the distributor.
So there’s different models being adopted by banks and they are very much commercial decisions, made by the banks themselves. But I think there’s also been a lot of commentary from the CEOs of those banks, who are embarking on those processes, that they’re focused on getting their businesses back to core banking. And to make sure that their businesses, I suppose focusing on simplicity, as a pathway to improving customer relationships.
Jessica Amir: Turning the page again now to open banking. Can you just tell viewers what it actually is and what it will deliver?
Anna Bligh: At a macro level, open data and open banking is a very significant transfer of power from businesses to their customers. It will enable customers, it will give customers a legislated right to access their own data. That is all their own transactional and banking records, to transfer all of that to a competitor of their bank. So if they’re looking for the best mortgage rate, they will be able toliterally at the press of a button, have their transactional data, their banking records, their saving records sent to another financial services provider, when they’re shopping around.
And banks are going to be the first cabs off the rank, but this is something the Government is looking to make changes in, right across the economy. So banks will be the first to drive this. But we will see this come into the utilities sector, into telcos and into other large organisations that know a lot about us, as consumers, but we don’t necessarily have access to that easily. So opening that up puts the power back into the hands of the customer.
And customer data has always very traditionally been seen by banks, and I think other businesses, as part of their commercial property, their commercial advantage.
So it’s a very big shift in thinking about, who has access to that data and putting that power into the hands of the consumer. So I think we will see savvy consumers making full use of this and looking around for the best price. And that in itself, a more empowered consumer, makes for a better relationship and it also means that you’ll see stronger competition, for customers.
Jessica Amir: Last but not least. What would you really like to achieve big picture, in your term as CEO?
Anna Bligh: I’m here as CEO during probably one of the most turbulent times for Australian banking. Since perhaps nationalisation more than a century ago, or the threat of nationalisation. I’m here as CEO at a very very turbulent time. So, one, I would like to navigate through the Royal Commission and come out the other side of it, in a way that brings banks back into much calmer waters. Gives Australian consumers and the public at large, real confidence and respect back, to the banks that serve the Australian people.
And be able to look back over a couple of years after the Royal Commission and say, ‘that was really tough, but out of it, we’ve seen better banking. We’ve seen customers get a better deal and the reputation of Australian banks, has gone from an all-time low, right up into a global high’. And I think if Australian banks can do that, then that’s a great story for Australia to tell the world.
Jessica Amir: Thank you so much for your time and for your insights into the industry’s perspective.
Anna Bligh: Thank you.