Westpac's Caesar on CCR and innovation

Despite the unprecedented scrutiny of bank boards and senior executives, new Westpac director Nerida Caesar believes there is “no better time” to sit on a bank's board.

The former Equifax chief executive was appointed to the role on Friday 1 September, just prior to the Commonwealth Bank announcing a restructuring of its board of directors – including two retirements.

In an interview published on Westpac’s website, Caesar said joining Westpac as a director was a “challenging opportunity” in the current climate but one she was excited about.

“There's absolutely a job to be done by financial services to tighten up processes, systems and compliance, but at the same time there's a great opportunity for a bank like Westpac to continue to lead in the industry, to keep building on its great brand," she said.

Caesar’s decision to take on the directorship of a major bank follows a career of more than 30-years in management positions, most recently as CEO of stockmarket-listed credit agency Veda, which was bought by Equifax last year. She remains on the Equifax board.

'Heart and lung surgery'

While technology and data-driven customer innovation is a top priority for all players in the financial services sector, Caesar said banks needed to choose between being "caught by their legacy” or “innovating” around it.

“Companies are creating like never before – there are a lot of ‘firsts’ happening – bringing life to new ways of working that consumers hadn’t even imagined,” she said.

“A decade ago, when smart phones became more prevalent, power moved into the hands of the consumer and new business models emerged. Before, we were having a data centre discussion; now it’s about front of house, how to build for consumers who have smart phones in their hands, with the capability of application programming interfaces (APIs) to open up data and make it accessible.

“Changing out back-end (banking) systems is like doing heart and lung surgery – it’s massive. But there's no reason why a mature company can't innovate around it.”

The major banks' technology strategies have differed in recent years based on their legacy systems, as some overhauled core banking platforms while others, such as Westpac, prioritised their investment on other projects and innovation.

However, Caesar warned that companies’ fears of data security breaches were well founded and that new data breach reporting laws due to come into force next year would be a “good thing for consumers” as companies become more diligent.

Critical mass of data

She’s also still a strong believer in Comprehensive Credit Reporting, a regime yet to be fully realised in Australia largely thanks to the big four banks dragging their feet on data sharing.

“It's really important to move in that direction. Australia is one of the last two OECD nations in the world to not have [positive credit] reporting," Caesar said.

With CCR taking time to gain traction after its ‘soft’ launch three years’ ago, the government recently flagged it will make company participation mandatory if needed.

Caesar said companies shouldn’t think about CCR as giving their data away, but about using it in a way that benefits the economy by opening up new opportunities. She said Equifax “proved out” the uplift it could bring to large lenders, not just small lenders and fintech start-ups, as has been predicted by many commentators.

“It's going to be quite a change, and you could argue both sides of whether it should be mandatory. But you need a critical mass of data of around 40 per cent of all lending relationships for the data to be predictable," she said. "We're at about 29 per cent data load today, and by Christmas we'll be at about 35. New Zealand is well over 50 now – they are just getting on with it.”

Caesar said the key factor that drove her towards Westpac was the place it plays in supporting the economy, and the opportunities ahead with open bank data, API strategy and the “power of the consumer”.

“Australia is at the bottom of the curve on productivity as an economy. The banks play a major role in lifting that,” she added.

Westpac chair Lindsay Maxsted said the board would be strengthened by Caesar’s “deep business experience, particularly in technology and innovation”.

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