NZ bankers and the large brick wall behind innovation

  • By Christine St Anne

Legacy issues, consumer trust and a “large brick wall” behind innovation are some of the issues keeping New Zealand bankers up at night.
 
Speaking at RFi Group’s recent Global Digital Banking Conference, BNZ chief marketing officer Jason Chan (pictured left), Westpac chief product officer Shane Howell (pictured right) and Kiwibank general manager, borrowing and investments Matt Macpherson outlined a number of road blocks they believe are slowing down the pace of innovation in New Zealand.
 
The panel, chaired by RFi Group research director Kate Wilson, the bankers outlined a number of concerns that were actually consistent with the Australian market including trust and legacy.
 
While current research from RFi Group reveals that consumers trust their banks, trust levels dipped in the region compared to global markets.
 
According to Howell, the current remediation programs in the sector highlights further that trust needs to be addressed before any bank embarks on a futuristic path typified by Jetsons family who lived in a utopian future.
 
“Trust remains a big issue for us. We are trying to self-regulate and hold ourselves to higher principles. The sector is currently paying out hundreds and millions of dollars in consumer refunds,” he said.  
 
“We need to address these trust issues will do before we venture off into theJetsons' world.”
 
He also spoke out on the “big brick wall that sits behind innovation” that makes it “hard yakka” for any bank embarking on transformation.
 
“We still have the same dreams, ideas and concepts as the startups but keep hitting a large brick wall. We have legacy systems in an organisation (Westpac New Zealand) that is now 155 years old”.
 
Similarly, Kiwbank’s Macpherson also acknowledged issues around the lack of “speed and delivery” of innovation.
 
“The fintechs all have the luxury of being nimble. We are running integrated businesses. However, when it comes to change – we need to stay relevant and keep up with consumer expectations,” he added.

A nimble structure

 
For BNZ’s Chan, “all of the above” issues are keeping him at night adding that getting a customer focus is a challenging.
 
“We have been a large organisation for many years. With that comes a big list of priorities. Banks tend to want to do everything for everyone”.
 
Here the discussion moved onto fintechs and Westpac’s Howell acknowledged that the nimble structure of fintechs remain a big point of difference compared with full service organisations like the banks.
 
"I like the simplicity of start-ups with their one product one proposition and one price point. It’s such a luxury. We operate across retail and institutional clients, servicing many customers.
 
“We need to take a good hard look at ourselves and decide what we want to know in the future.”
 
Collaboration rather than disruption will be a feature in the market, with Kiwibank’s Macpherson echoing views of fintech guru Chris Skinner who recently said that financial disruption has eased.
 
“This was because of partnerships. I am less concerned about disruption and reintermediation than I was three years ago.”
 
Indeed, Macpherson believes that the banks in New Zealand won’t allow their businesses to simply remain product manufacturers. “There is enough competition to keep us on our toes.”
 
For the three bankers, open banking is an initiative that needs to be embraced.
 
“Any initiative that is good for competition and good for the consumer is good for business,” quipped Macpherson.
 
Chan added that the industry should be “leaping at an opportunity” that gives banks the ability to harness consumer data and deliver on service and value.
 
However, Howell was cautious saying the sector must remain mindful of the risks associated with data sharing.
 
“That’s why there is power in regulation and standardisation.  We need to get it right and ensure data sharing adheres to the right standards.”