Bendigo’s CEO on challenging perceptions and rethinking top line growth

  • By Christine St Anne

Bendigo Adelaide Bank’s new chief executive aims to challenge the perceptions that second tier banks are unable to meet the needs of customers from the big banks while embarking on a strategy focused on expanding its offerings amid a challenging growth environment.

Baker whose appointment was announced in March following the retirement of long-standing chief Mike Hirst formally moved into the role earlier this month.

Her immediate remit is to boost the awareness of Australia’s fifth largest lender among the consumers of the big four.

“Research has shown that 70 per cent of customers of the big four don’t believe any second-tier bank has the capability to meet their needs. That is a perception we know is incorrect.”

The new CEO acknowledges that it is a challenging period for financial services “but the greatest opportunity for us is to get more people to understand who we are as an organisation”.

Part of this will do go down to trust issues being played out amid the “shadow of a royal commission” as well as capitalising on innovation

“Given the current pace of disruption, banks today will look very different in the future. We are well placed to compete with any of the banks. Our deep connection to customers – which has been reflected in our 160-year history - holds us in good stead,” Baker said.

She cites Roy Morgan’s Net Trust Score as evidence of high trust levels the bank has among Australian consumers, in fact in its latest survey it was the only bank in the top 10 brands with a highest trust score – the business ranked third behind the NRMA and Aldi.  

“Trust goes to the core of the integrity in an organisation We are focused on creating awareness and reinforcing our positioning that we are doing the right thing by our customers,” Baker said.

The bank of course came under scrutiny recently at the Hayne Royal Commission over its lending practices farmers from its Rural Bank business, which it bought in 2010.

A strong proposition

Baker still believes the rural bank has a very strong proposition to the market.

“What we have seen in the royal commission related back to a decade ago. Any issues raised at that point of time, we have worked to remediate and put in place changes in policies and processes.

“That was lost in the royal commission. Instead the focus was on what happened a decade ago. We are very confident that Rural Bank has the best interests of their customers at heart,” she said.

“I expect the bank will continue to grow and continue to do the great work it does which is ensuring farmers are getting financial support.”

She also recognises that in an increasingly challenging environment, banks will have to rethink where top line growth will be coming from.

While Bendigo experienced strong growth in loans to owner-occupiers in its interim profit result, Baker said there will be a wider impact on mortgage books as regulators continue to manage the level of growth in lending.

“We are unlikely to see that level of growth in mortgage books to continue. The sector will have to look at how it diversifies – either into other asset classes or other forms of revenue streams.”

Citing competitive sensitivity, Baker wouldn’t disclose what specific revenue streams Bendigo will be looking at but in terms of its immediate focus, innovation will be key.  

Digital natives

Working with its long-term fintech partner Ferocia, the bank is set to launch a digital bank aimed at students and millennials she calls the “digital natives”.

“Our approach is to listen to our customers. We have learnt that there is a certain cohort of customers looking to move into more into a digital bank environment. If we are going to be responsive to customer needs, we need to have this type of offering.”

In her previous role as chief customer officer, Baker was also key in getting the bank to support the New Payments Platform.

Bendigo was also the first bank to offer all types of mobile wallets including Apple Pay and Google Pay. The bank will remain focused on how to innovate further in the payments sector, using platforms like the NPP, “that make it easier for our customers to do business with us”.

Boosting its small business portfolio will also be key strategy for the bank – a unit that has been struggling recently.  Consistent with its strategy to increase awareness among consumers, the bank will also be ramping up its efforts in business banking.

“We are still new to business banking. Coming from a building society background we only converted to a bank in 1995 but we have all the products, skills and capabilities including great business bankers to engage and meet the needs of businesses.”

The Community Bank model will underpin this strategy. “Given our reach into 500 communities across Australia, there is a real growth opportunity to tap into the small businesses across these communities.”

This model will remain a core part of the bank’s strategy. Indeed, this business also celebrated a milestone – a 20-year anniversary.

To date, the network had returned more than $5.5 million in shareholder dividends and $183 million in profits back to local communities. In the next 12 months, the bank plans to set up six more locally owned and operated branches.

The full detailed profile of Marnie Baker will be featured in the August edition of AB+F.