Trust not easily rebuilt

Friday 20 June 2014

Cameron Clyne CEO, NAB

I have always had the view that debate about the role of banks is important - and that banks have a huge responsibility to the community to both further and contribute to that debate.

We look after customers’ money from cradle to grave. We support economic growth by lending to businesses and funding infrastructure projects like hospitals, schools and roads.

Collectively, we employ more than 100,000 Australians. And importantly, almost every Australian worker has a stake in our businesses, through their superannuation fund.

The Government’s Financial System Inquiry, which will hand down an interim report next month, is a timely look at the industry post-GFC to ensure that it is meeting the needs of our nation today. And also that it is prepared to meet the needs of our nation over the coming decades.

I took the reins of NAB in the peak of the crisis, just as Lehmann Brothers was collapsing. It was a time when people around the world had lost confidence in the global financial system and the bond of trust with banks worldwide was damaged.

The loss of trust echoed the damage done to the reputation of Australian banks a decade before when they closed branches en masse.

Five and a half years on, as I prepare to step down as CEO of NAB, I still hold the view that banks have much more to do to rebuild that trust and restore the industry’s reputation.

Trust is not just a priority for banks or financial institutions but for all major companies in this country. If we want our customers for life, we have to build and strengthen those bonds of trust with them.

Competition is one part of it. At NAB we have been unashamedly competitive – in getting rid of fees and charges that annoy our customers the most; being the only major bank to have a transaction account with no monthly fees for all customers; or creating certainty by having the lowest standard variable home loan rate of the major banks for almost five years.

Certainty is important, because certainty helps build trust.

The changes we made delivered financial benefits to our customers at a time when they needed it most. Just as importantly, they drove greater transparency and fairness across the entire banking industry.

Like certainty, transparency and fairness are crucial to establishing trust.

Having a stable and well-regulated banking industry has been good for the economy. Unlike many countries in the world, money has been available to lend to Australians households and businesses, despite the global credit crunch.

Australia has emerged from the GFC with an economy that is now more than 15 per cent bigger than it was in 2008. By contrast, the US has grown by half that rate, while the European economy has actually shrunk.

NAB’s total lending has increased by $22 billion since 2008 – and we are still lending more to Australian businesses than any other major bank. We are committed to helping businesses grow, helping them to create jobs in Australia – and to helping them secure our future national prosperity.

Banks must also do their bit to ensure that we build trust and certainty for people by being there when they need us. I still find it unacceptable that, despite two decades of economic growth, three million Australians are locked out of mainstream finance. That means they can’t access a moderate amount of credit, a basic transaction account and general insurance, making them vulnerable to a cycle of fringe lenders and high-cost debt.

All of the banks have a responsibility to look beyond the bottom line and improve access to financial services, for all sections of the community – and at NAB we have committed $130 million in capital to support lending to people on low incomes.

NAB will soon mark five years since we launched what we call our Fair Value strategy – essentially a commitment to make banking fairer and redefine the relationship we have with our customers. A relationship founded on trust, transparency, certainty and doing the right thing.

I’m proud we have made significant progress, but also recognise there is still more to be done. And not just by NAB, but by all banks.

So whatever the final outcome of the Financial System Inquiry, I am confident it will identify opportunities to improve our financial system and create a platform for ongoing debate about what banks must do to ensure they help families, businesses and the nation prosper for decades to come.

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Jessica Forrest

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