Incoming Australian Bankers' Association chief Anna Bligh is not surprised local banks are under “unprecedented” pressure and an “explosion of scrutiny”, suggesting to the AFR Banking & Wealth Summit the world was seeing a global loss of faith in social institutions.
In Bligh’s maiden speech to the banking community, since officially beginning her controversial appointment as head of the ABA this week, she carefully detailed a world of eroding trust and how Australian banks can move forward in such a climate.
“My job description is quite simple,” she said. “To reverse a global trend.”
Citing an “implosion of trust" and a growing belief that mainstream institutions have failed to protect consumers during times of upheaval, the ABA chief said it would be her priority to face the "profound and fundamental shift in trust", overturn the “explosion of scrutiny” Australian banks face and “translate a massive reform agenda to a cynical and mistrustful public".
According to Bligh this very apparent shift in global sentiment went a long way to explaining the regulatory spotlight on Australian banks that has seen "17 reviews into the banking sector" in just 12 months.
“Given this profound and fundamental shift in trust, it’s no wonder and no surprise that banks here in Australia are under an unprecedented level of pressure and scrutiny," she said.
Bligh said there was, in fact, “a direct correlation” between the implosion of trust reverberating through western institutions and the explosion of scrutiny bearing down on Australia’s major lenders.
“And an explosion of scrutiny is exactly what Australian banks are currently facing,” she added.
Erosion of strength
Bligh described the members of her association as “one of our truly world class industries” and “the envy of the world”.
However, according to Bligh, Australia’s banks have also “lost trust in their ability to balance the interests of customers and shareholders". And both politicians and regulators have responded with unprecedented scrutiny. She was also mindful that the “erosion of trust” would, inevitably, lead to an “erosion of strength”.
Drawing on anecdotes shared earlier at the AFR summit by NAB’s Angela Mentis and CBA’s Matt Comyn describing the revolution triggered in banking by the advent of digital applications, Bligh said scrutiny and accountability would continue to grow exponentially for a sector that had endured “dehumanizing” change.
“The pressure and rate of change will continue to escalate for banks, in my view, for the forseeable future,” she said. “At the same time that technology has opened up this extraordinary level of new services and customer conveniences it has on the other hand had the effect of dehumanizing banks.
“As more of us have less time to talk to a bank teller, it’s easier for our banks to become monolithic, anonymous and opaque,” the former Queensland premier suggested.
But, she added, “banks do not underestimate the complexity of what lies ahead”.
Bligh outlined the immediate priorities of her new tenure into five questions:
- How to accelerate reform without comprising care and rigour?
- Which reforms to prioritise to deliver tangible benefits to customers?
- How to translate a massive reform agenda to a cynical and mistrustful public?
- How do we measure success, how do we know when we’re getting better and when these reforms are actually working?
- In the longer term, how do we move beyond what the public sees as incrementalism, how do we leapfrog that and get in a position where we can surprise and delight customers?
Bligh warned the summit that earning the trust of the Australian public “will be tough and take time".
With several bills awaiting passage calling for both a royal commission into Australia's banks and the radical tightening of the banking code of conduct, the office of the Treasurer Scott Morrison has been expected to announce further measures after digesting the latest report of the Standing Committee on Economics’ review of Australia's four major banks.
The House of Representatives Economics Committee Chair David Coleman, also attending the AFR summit, has previously recommended “name and shame” reforms to ensure bank executives accountability.
“Banks understand they are swimming against a tide of powerful global forces and this can be extremely exhausting and dispiriting,” Bligh said. But worth the effort, she concluded.