Australians and their money: what’s the future role of the bank?
American Chamber of Commerce
12 September 2016
Today Andrew Hagger, Chief Customer Officer, Consumer Banking and Wealth Management, spoke to the American Chamber of Commerce in Australia about Australians and their money: what’s the future role of the bank?
*** Check against Delivery ***
Thank you Ray for the kind introduction, and to AmCham – thank you for having me here today. The last time I was here was in April 2015. That’s a lifetime in the fast-moving world of finance and politics. Since then we’ve had a general election, we’ve seen Britain vote to leave Europe, and we’re seeing an interesting US election campaign play out in front of us. Meanwhile, global financial markets have been buffeted about by both geopolitics and macro-economics.
For everyday Australians, this forms a challenging backdrop to their own personal financial lives. We’re all increasingly overwhelmed by complexity and choice with so many products, so many strategies, so many opportunities, so many risks and so many gigabytes of information presented before us.
So much of the information we receive about what’s happening economically all around the world is pessimistic and contradictory – a terrible combination when it comes to trying to be optimistic and strategic about your personal finances. When you’re always being told the sky is falling in, it doesn’t create the right environment for confident decision-making around financial choices.
So banks face a stiff challenge against this background of volatility, complexity and information overload. We must think about the impact this complexity has on how people think about their money and about the impact we have as banks. And that’s what I want to talk about today. How we see this challenge playing out and how we’re responding to it.
What is the role of the bank in in this age of low confidence and high confusion?
Part 1: The role of the bank: to be More than Money
We’ve been pondering this question for a long time. In fact, it was the genesis of our new brand campaign.
Some of you may have noticed that NAB has a new message for Australians. In July our More than Money campaign was launched with a radically different message than any other bank has ever gone to market with. It’s unexpected. And it was always going to create a new conversation about what a bank should do and be.
But given the only sure thing these days is change, we believe it’s time for a new conversation about the role of the bank in times like this. Here’s a taste of what we’re out there saying.
More than Money: Why are we saying this? Why is a bank of all institutions saying this?
Because it’s the answer to the question, “What is the role of the bank?”
We think it’s time to move beyond the merely transactional – from a focus on T&Cs (that is, terms and conditions) – to a focus on T&C – trust and confidence. To understand how money shapes, enhances or sometimes shatters lives. And to be there with resources, solutions and support when we’re needed.
We all want to live a life that is not shaped purely by money. But we often feel controlled by our financial circumstances, rather than in control of them. So NAB believes our role should be to help Australians feel in control of their money, so they can see life beyond it.
I believe there are three things we need to do to fulfil our role as a bank and be ‘More than Money’.
First, we need to build trust and confidence in the community.
Second, we need to make it as easy as possible for our customers to understand their finances and interact with their money.
And third, we must be personal and supporting for our customers. Money enables an outcome in the lives of our customers; it is not the outcome itself. So our role is to support that enablement process and make it as personal as possible. We have been managing money for more than 150 years. But, we want to be as good with people as we are with money.
I’d like to explore each of these in a little more detail.
Part 2: Building trust and confidence
We have a big task ahead to rebuild trust and confidence with the Australian public.
I’m stating the obvious when I say that the current public debate is a clear sign that banks haven’t always got things right. Both at NAB, and as an industry, we’ve dedicated a lot time looking at what we can do to better meet community expectations when it comes to service, integrity, trust and ethics.
We’ve implemented a package of measures led by the Australian Bankers’ Association, designed to protect our customers, make us more transparent and accountable, and to rebuild that trust and confidence. We’ve agreed to an independent review of sales commissions and product-based payments, we’re increasing whistleblower protections and we’ve committed to further improving complaints handling.
I do believe these reforms will make NAB a better bank for our customers – and that our industry can rise to the occasion.
These reforms, combined with the many reforms already implemented or in-flight – including FoFA, Stronger Super, Basel and NSFR to name a few – all unequivocally improve an already strong financial system that we want to be relentless in its focus on doing the right thing by its customers.
But, More than Money is more than a commitment to the laws of the land; it’s about understanding and supporting the rationale behind our laws; it’s about having the right culture, the right values – and it’s about helping the community to understand our commitment to that culture and those values. Ultimately, this is all about enhancing the customer experience. That’s what More than Money means.
In everyday terms, it means looking at the person beyond the transaction or the account number – at the dreams, passions and problems that drive the smallest needs and the biggest ideas – and we do whatever we can to help make life happen, to get customers to where they want to go – whatever that means for them.
More than Money means that as a bank, we don’t think about a home loan, we think about home owners. We don’t think about credit cards – we think about ballet lessons, grocery shopping and the price of milk – and all the things Aussie households spend money on. It means we don’t think about super contributions, we think about what you’ll need to enjoy your retirement in comfort, and afford that trip around Australia you’ve always dreamed of.
Essentially, NAB’s role is to help people with the money component of the ‘life’ equation. To do this, and to do it well, we need to understand success as our customers define it, and make the process of “enablement” right for them, easy for them.
Part 3: Making banking easier
This era of complexity means a key thing a bank needs to do is make life simpler – make it as easy as possible for our customers to understand their finances and interact with their money.
This means making it easy and convenient for you to check balances, transfer money to friends, and pay your bills with just a few taps on your mobile phone.
It means giving you more control over your credit and debit cards from your mobile – something you’ll hear more about in coming weeks as we begin testing some world-leading technology in this space.
It also means giving our customers the same level of efficient, but personal service when they call our contact centre, or when they come in to a branch.
And it means making sure our customers can have a great banking experience any time, anywhere – and one that acknowledges them as people, not just account numbers.
For me, making banking easy also means making sure we bring all our customers’ financial needs together and think about them holistically.
Until recently, NAB would send customers to different parts of the bank for the different needs of the same customer. For everyday transactions and lending we’d send them to our Branches, or to a Broker, or to our call centre, but when it came to planning for retirement, we’d send them to our wealth team. That was despite the pool of the money that a customer was drawing on for all those purposes coming from the same pay packet.
That set up – banking over here and wealth over there – was easy for us, but it wasn’t easy for our customers.
Most people don’t think about their banking and wealth separately. They just think about ‘their money’. And if that’s the way they think, then that’s the way we need to think too.
Three years ago we started moving in this direction – and moving banking and wealth closer together for our customers. In that time we have taken some huge steps up what is a very tall, very steep mountain to climb.
We announced a $2.4bn partnership with Nippon Life for the sale of 80% of our insurance business and a 20 year distribution agreement. This partnership is extremely important because it allows us to focus more on our core expertise and frees up the bank’s capital to be invested in products and services that really help our customers with their money, like super, investment and advice.
Secondly, by merging five of our super funds into one, we created Australia’s largest retail super fund, MLC Super, with $70bn of funds under management. This was a bold move – but an important one. It will make it far easier for our customers to move between retirement products in the future and it will ultimately deliver real value for them through this scale.
And thirdly, just two months ago, NAB truly reorganised itself around the customer by bringing its retail banking and wealth businesses under the one umbrella. My new role is to lead this division.
Each one of these changes was in itself a huge, complex, time consuming piece of work. Even before we announced the sale of the life insurance business, we had completed more than two years of negotiations and due diligence with Nippon Life.
Creating Australia’s largest retail super fund in less than nine months was like creating a new country, building a city infrastructure and writing a new national anthem all at the same time.
But I can tell you that despite all that hard work, we are still a long way from the top of the mountain. For all that work we’ve done, we’re still only at base camp.
To actually bring banking and wealth closer together for our customers, we have to continue to change the way we work, and the way we serve our customers.
To get to the top of the mountain, the leaps that get us to base camp will evolve into smaller, but still very important, steps. We’re now focused on those incremental steps that make it easier for our customers to interact with their money, whether that is everyday banking, a mortgage or an investment in a super fund. It’s all about radical incrementalism – that series of small determined steps that ultimately add up to a huge change.
Part 4: A great bank helps you control money so you can see life beyond it
I’ll go back now to the other role that I believe a bank needs to play for our customers: enabling ‘life’ for our customers, we want to help you control your money, so that you can focus on the things that matter in life beyond it.
This starts with really understanding what our customers need and how we can support them. It may be buying a house, or saving the funds for a holiday, or buying their first car, or it may be that they need help with their finances when things get tough.
One of our customers, Dimitra, went through an ordeal that no one should have to face. She paid $250,000 to a property investor for a property that was not passed onto the vendor, so she ended up out of pocket and with no investment to show for it. The fraud meant she was facing severe unwarranted, financial hardship and potentially losing her home. She couldn’t pay the existing mortgage, which was held by NAB.
What’s sad is that she was so fearful of approaching us to discuss the situation. What’s wonderful is what happened next. Her banker, Gayle Gordon, supported her through her legal battle even though she was in arrears on her mortgage. Ultimately, she was granted a payout, and although she’s still waiting for the money to hit her account, we’ve been able to accommodate her situation so she could keep her house.
This is a ‘More than Money’ moment. One of our people seeing the person and their pain behind the banking problem and committing to staying in it with them until it was resolved.
To me, Dimitra’s story and the way Gayle helped, is the future of banking.
Whatever the circumstances, the role of our bankers and advisers is to listen, to understand and to help customers by providing the right products, services, guidance and advice. We don’t just understand the rational facts about money, but also the emotional and lifestyle issues surrounding big decisions in life.
As a leader, one of my important roles is to support that process by investing in the capability of our bankers and advisers, and the systems, processes and tools they use, so they can give our customers a great experience every time.
Last October we announced an investment of $300 million in our wealth business. Today, I want to walk you through the three priority areas that we intend to invest the $300 million into.
- First – we’ll invest in a series of digital innovations that make it easier for our customers to understand their money.
- Second – we are committed to face-to-face financial advice, and we will invest further to grow this business.
- Third – we will invest in simplification of our back-office systems.
Let me talk you though each of these and how they will improve the customer experience.
We’re investing in digital because it’s opening new doors. Digital is making it economically viable for us to provide help, guidance and advice to customers who would not normally want to, or have the means to seek face-to-face advice.
Over time – you’ll see us to continue to invest in a series of small incremental innovations like our recently launched SuperSizer tool.
SuperSizer provides a digital “health check”, where customers can easily compare how their superannuation savings sizes up with other people with a similar profile.
All a customer will need to do is answer a few simple questions to get a comparison real-time, on screen. So, if you’re 25 year-old male working full-time, we can tell you that people like you will have about $29,000 saved in super. You can work out if you’re ahead, or behind. And you can click through for more information about how to build your super balance.
Innovations like this will make a difference for specific customer groups across the customer lifecycle.
Investing in digital is also important for customers who seek face-to-face advice. Helping customers connect the tools and transactions they complete digitally with the conversations they have with their adviser delivers a better, more efficient customer experience.
While we’re investing in digital, we also know that face-to-face advice is still vital for millions of Australians. Face-to-face advice should be there for customers when they need someone to turn to.
So, we will invest in our advice business – this will involve improving our systems so that customers can get more efficient service from their advisers.
We’ll also invest in our people, platforms, products and processes, so we can better support advisers to do their jobs.
For example, we’re increasing our state-based adviser support team to 150 people to provide better local on-the-ground support to advisers across the country.
We’ve also added 50 funds to the MLC Wrap & Navigator platforms recently to help advisers better serve their customers.
And we’re investing in technology to reduce adviser administrative and compliance workload, so advisers can spend more time with customers.
Finally – our third priority is focussed on simplifying our back end to make it easier for our people to support advisers and customers – including the digitisation and the simplification of processes and systems. This work will help make us more efficient and ultimately improve the customer experience.
These incremental changes will run parallel to work that is already well established at NAB and that is making huge inroads in to improving the experience for our customers.
Part 5: Always evolving
I expect the role of the bank will continue to evolve. As we learn more about our customers, we’ll learn more about how we need to grow and change to build trust and confidence, make their finances easier and enable life.
We’re inviting customers in to help us shape our role. The Net Promoter System is making a significant difference to our customer service at NAB. It’s making a difference because it’s changing the way decisions are made in the bank.
This gives us the feedback we need to make changes that will improve the experience of our customers – both big and small.
For example, our branch in Glenelg (SA) reshuffled furniture and installed better signage after comments showed customers had difficulty seeing where the teller counters were.
On cold mornings the team from NAB Armidale (NSW) make sure the branch is warm before doors open in the morning – a particular bugbear of customers there.
On the bigger end, we invested in an update to our personal banking origination platform that has had a huge impact on home loan and personal loan applications, processing and approvals – making it all faster and easier.
So, what is the future role of the bank?
I believe – and NAB believes – it’s about being as good with people as we are with money.
It’s in about shifting our focus. We need to be less about the Ts&Cs of Terms and Conditions and more about the new Ts&Cs of trust and confidence.
To help Australians feel in control of money, so they can see life beyond it.
If we can do that, I think we’ll be the bank that Australians want us to be.