NAB News

The below speech was delivered by NAB CEO Ross McEwan at an Australian Banking Association and Trans-Tasman Business Circle event in Sydney on Thursday, 22 February.

**Check against delivery**

Good afternoon, it’s wonderful to be here. It was great to hear from both the Australian Treasurer and New Zealand Finance Minister earlier.

It’s with mixed emotions that this is one of my last external engagements before retiring from NAB and banking in April.

I have loved my career in banking.  The sector has incredible purpose in helping people and communities prosper.

So, there’s sadness in saying goodbye to my outstanding colleagues at NAB and others I’ve worked alongside in banking to try and live up to that purpose.

At the same time I will leave proud of the work done at NAB and across the industry to regain trust and respect with customers. Trust is hard to win but very easy to lose.

We’re in good shape, but with my standard caveat: there’s more to do.

NAB appointed chair of the Australia Banking Association

That will soon be the responsibility of Andrew Irvine who has been appointed NAB’s next CEO. Andrew will also take on the role of ABA chair, leading on behalf of NAB. He comes with great insight and energy, and I’m sure he will do a terrific job.

Of course, Andrew can’t do it alone and I have great confidence in the team alongside him.

The recent five-year anniversary of the Hayne Royal Commission is an opportunity to reflect on how far the industry has come.

More importantly, it has been an important reminder of simply getting the basics right.

At NAB our focus during the past five years has been on customers and colleagues and we’ve made progress. That doesn’t mean the hard work stops. Again, there is more to do.

Under Anna Bligh’s outstanding leadership, the ABA can continue to advocate in areas that will support customers as well as strengthen our industry, strengthen the communities we operate in, and strengthen the economy. Any industry can be distracted with issues that come up, but we wanted to build focus around big priorities.

Working with Anna and her team, the other ABA member banks, and in consultation with Treasurer Chalmers and the government, we have identified five key priorities for the industry:

1. Supporting customers impacted by the higher cost-of-living;
2. Protecting customers against scams and fraud;
3. Working with customers as they change the way they access and use money;
4. Modernising and simplifying payments structures; and
5. Working with the insurance sector to deal with cost issues around climate volatility

Before we get into Q and A, I’d like to focus briefly on three of these areas as well as another matter that is on my mind as I leave banking – regulation.

Supporting customers impacted by the higher cost-of-living

Firstly, supporting customers impacted by the higher cost-of-living.

Australian consumers are broadly showing resilience and making sensible choices about their finances: cutting back where they can and saving $300 a month on average.

But it’s clear there are some Australian households and businesses struggling or concerned about making ends meet as the rising cost of living bites. Recent NAB Economics research shows more than 40% of Australians experienced some form of financial difficulty in the December quarter, in line with recent trends.

All banks want customers to remember that we are here to help: please call early if you’re finding it tough.

Interestingly, our research finds that home ownership is clearly linked with higher wellbeing.  That’s one of the reasons why I’m concerned about the housing supply crisis. The Great Australian Dream continues to feel out of reach for so many. Banks, working with government, councils and developers, have a big role to play here.

Looking ahead, I am positive about the Australian economy. It’s slowing but we should avoid recession and are well placed to improve later this year. Inflation is easing and it appears interest rates have peaked. We still have low unemployment, strong demand for natural resources, a growing education export market and high migration levels. All of these bode well for the Australian economy, but it is fragile.

Protecting customers against scams and fraud

Strong action on scams is another priority.

We have all seen the devastating impact they are having on businesses and communities.

Lets be clear these thugs are the modern-day bank robbers. They are highly organised multi-national criminals and they are running low risk, high payout operations.

Tools like artificial intelligence can play a role identifying unusual behaviour and stopping scams. At NAB we are working on a range of initiatives to help address the epidemic. For example, last year we removed links from text messages and our new payment alert function helped customers abandon more than $50 million worth of suspect payments.

Educating customers about how to stay safe remains essential role for media, banks, Government and other industries.

The industry is very focused on this issue with investment in resources and technology.

But banks can’t do it alone. Protecting Australians from scams will take a team effort from governments, telcos, social media companies and the community. The banking industry’s Scam-Safe Accord announced in November is a great example of this.

Working with customers as they change the way they access and use money

We are also continuing to meet the changing needs and behaviours of our customers.

Industry figures show than 98% of customer transactions now take place online as digital solutions become more efficient, accessible and effective.

At the same time, far fewer people each year are using branches – over-the-counter transactions at NAB branches are down 52% since 2019. I appreciate that closing a branch causes community reaction, but the reality is that we are following the behaviours of our customers.

Cash use is becoming less common. There’s still plenty of cash in circulation, but as recent RBA data shows, it’s likely less than a quarter of it is actually used for spending and is rather stashed away. Usage has fallen around 5 percentage points since the pandemic and is likely to fall further.

I don’t believe we will ever become a cashless society, but we now have far less physical cash circulating in the economy. This means we need to support customers with options, as the way they bank and use money is changing dramatically.

Reducing red-tape

Over the past 40 years I have seen a lot of change in our industry, at our own making and because of policy. While it is nearly always done with the right intent, banks and government can over-complicate things, which results in poorer experiences and outcomes for customers.

Rules introduced or changed for responsible lending, the introduction of comprehensive credit reporting, and the intersection of that with hardship, the banking code of practice, the consumer data right – these have all been important initiatives individually.

They each have a role to play, but collectively they have created a complexity that ultimately impacts customers.

Sitting around the table with ABA members it is very clear how challenging the collective impact of regulation can be on small and medium-sized banks, and in turn their customers.

The simplification and connectivity of these various rules and regulations is important to consider.

Competition in banking will further flourish when this incredible complexity disappears.

Unnecessary complexity is not limited to banking.

Governments and regulators must look to reduce red tape and complexity at every opportunity for consumers and businesses.

In doing so we will enable business to grow and invest. That’s how we create jobs and build stronger communities.

Conclusion

In closing and before we go to questions, there is plenty of work ahead.

Continuing to build strong banks, that our community can trust, is vital. And to do this, our customers and colleagues must be at the heart of all we do.

I’m excited by what can be achieved together.  I look forward to watching Anna continue to lead the ABA, alongside NAB as chair, over the coming years.