Ross Greenwood in joined live in studio by ANZ (ASX:ANZ) CEO, Shayne Elliott. They talk Royal Commission, gaining customers trust and whether relationships in the workplace should be regulated.
Introduction: ANZ CEO admits banks have lost community trust
Ross Greenwood: One important sector that needs to be healthy for all of Australia to be strong is the banking sector and as you’re aware right now there is a Royal Commission into our banks underway. That is going to examine the misdeeds of our banks.
At the same time you’ve got the banking regulator APRA looking at whether, in fact, there’s a culture inside, particular, the Commonwealth Bank, as to whether they’ve put profit ahead of the customers interest. Therefore you’re going to argue the question as to whether there is enough competition inside our banking sector to give you the very best deal possible.
Indeed, you even heard last night from me ACCC chair that Rod Sims, on the program, he said, one of his priorities for this year is mortgages, indeed, whether people who are existing customers, get as good a deal as new customers coming through the banks.
With all of those questions and so many more, let’s introduce the chief executive of the ANZ bank Shayne Elliott. He’s live with me in our studio, he’s at 3AW, in Melbourne, he’s also going to take your calls on 131873. It’ll be great to have a chat. He’s on the line right now. Good day, Shayne, how are you doing?
Interview with: Shayne Elliot, ANZ, CEO
Shayne Elliott: Good Day, good to see you, thanks.
Ross Greenwood: Good to be with you. Let’s start with this, some of described this doing talkback radio as a hearts and minds campaign to try and win over the Australian public, to make them like banks a little bit more. Is that exactly what this is all about?
Shayne Elliott: There’s probably an element of truth in that. I don’t know that that was our idea when we set out about doing this. Look, we said that part of the reason we’re having a Royal Commission and a lot of people are interested in the conduct of banks, is because we’ve lost the community trust. That term gets bandied around quite a bit now.
Well, you can’t have community trust if you’re not willing to engage with the community. You got to be out, you’ve got to be visible, you’ve got to be out talking to people. We have opened all the doors we can to do that. Whether that’s in local town halls. Whether that’s doing things like this. Whether it’s through social media, whatever. We need to hear from people and we need to have an avenue for also telling our story.
Ross Greenwood: How many staff does the ANZ bank have right now?
Shayne Elliott: We have about 43,000 around the world, about, literally, half of those are in Australia.
Ross Greenwood: Is it hard for you as the chief executive to control the behavior of all of those people?
Shayne Elliott: I can’t control their behaviour. What I’ve got to do is A, lead by example, I’ve got to tell people what the behaviours we expect of them and be really really clear about and we’ve got to set up all the right processes and incentives to make sure they do the right thing. When they don’t, we find it, we call it out, we stop it and make sure it doesn’t happen again.
Ross Greenwood: Was the Prime minister right the other day to say that senior ministerial staff should not be having sex with their own starters?
Shayne Elliott: Look, I think, in terms of setting standards of what do we expect of our people is absolutely right. I think it’s not at all unreasonable to say the community would not expect, because given all the potential conflicts of interest, I think it’s a reasonable expectation.
Ross Greenwood: Do you believe that’s right in public companies as it should be in public office?
Shayne Elliott: I think, well, we do have code of conducts. We do have a code of conduct about what’s acceptable and what’s not, and we say, hey, we don’t have bans on things, but we say, hey, look if you’re in a relation with somebody at work you should let us know. Then we can talk about whether we need to make changes about who’s working where.
Ross Greenwood: Do you believe that it is, because it’s about the power issue, but what I’m going to hear is you have so many staff, and it is about behaviour, and if you say, for example, there’s been issues in regards to the bank bills swap rates, for example.
That is the pricing of bank bill swap rates, whether they’re in the banks favour or others and whether people were taking advantage of customers, as you’re putting together you’ll dossier that you’re putting before the Royal Commission. You’ve said publicly, look, you hear about all of these things one by one, but when you put them together in a dossier, it really is a bit of a shock.
What I’m trying to get to hear is it’s about behaviour. You can say anything but out there in the field people might do thoroughly different things that have an impact on bank customers.
Shayne Elliott: Yes, sure but it’s also true that our people are every day Australians. We’ve got all walks of life, all political persuasions, all kinds of people who work at the bank, but they’re good people, they are decent people. They don’t come through the turnstiles and suddenly change who they are.
These are people who have integrity, who want to do the thing but sometimes we’ve put in place incentives that actually encourage people to do the wrong thing, unwittingly, not our intention, yes, it’s difficult but that’s my job.
Ross Greenwood: Do you believe it’s important that banking operations are separated from investment banking operations, and other investment operations, to take away conflicts of interest?
Shayne Elliott: Look, interesting. I spent quite a bit of time of my career working in an American bank and I spent time working in the United States, which is probably the most famous for that very strict separation the old Glass-Steagall Act. I was around when that got repealed, when we put them together. My personal experience of that is, you have very different cultures in a ordinary commercial bank versus an investment bank.
They just think about things differently and there was absolutely a clash there and so, I don’t know if you have to ban those things. I’m not sure you can draw lines in saying what’s exactly an investment bank versus a commercial bank. There are clearly cultural issues when you try to do too many things as a company. That’s exactly what ANZ’s trying to do at the moment, simplify what we do. Do a few things and do them well.
Ross Greenwood: You’re selling off parts of the investment business, you’ve sold them already or they’re in the process of being sold. Do you believe that in your mind as the chief executive you are doing this because it’s opportune to sell them at the right price for the shareholders, or because it overcomes some of the conflicts that might of been inside the bank?
Shayne Elliott: We’ve sold 16 businesses over the last two years. The biggest ones probably being the wealth ones. When we made those decisions they were purely strategic. It wasn’t about, hey, there’s a good price for this, lets flog an asset, it wasn’t that.
It was really about our belief that the way to win for our customers, to do the right thing by them and our shareholders, is do a few things and do them really really well. We need to shed all the things that aren’t really core to who we want to be.
Ross Greenwood: Okay, but as this Royal Commission unfolds and you’ve put your dossier are in there, do you believe that there is more than what was already in the public eye, that is going to be unfolded before that Royal Commission?
Shayne Elliott: Undoubtedly, there’ll be a lot of things that, I don’t know that they were secret, a lot of these things of things we’ve reported to ASIC or APRA et cetera. I’m not sure. There’s certainly way more attention and focus on this today. Yes, there’ll probably be, public will go, I didn’t know about those things, here’s some things that surprised me, sure.
Ross Greenwood: You didn’t want a Royal Commission.
Shayne Elliott: If you remember we wrote to the government and said, yes, let’s have one. So we —
Ross Greenwood: Before you wrote to the Government you had – [cross talk]
Shayne Elliott: The reason is, and look, I still think that’s the case. It is an enormous effort we’re going about. I would rather, obviously, I would rather we focused our resources at ANZ on fixing problems and doing the right thing, rather than talking about the past, but I understand the reason for it.
Ross Greenwood: Is the banking industry susceptible to disruption from digital players, as we’ve seen so many others susceptible to that disruption?
Shayne Elliott: Absolutely, that is the real life, that is what we living in every day in the industry.
Ross Greenwood: I would suggest to you that I have not been in a bank branch, I’m trying to think here, I’m thinking three years. It might be four, it might be two. I’m not sure but it’s about that. How do you make me loyal to your bank and your brand if I don’t go to the bank, if I don’t see a person. Where is a human face because if I’m interacting with your website or your apps or whatever it might be, how am I loyal to the ANZ bank?
Shayne Elliott: Great question. I’ll give you an example or the way we think about it. You probably are incredibly loyal to a bunch of apps that sit on your phone. People love Apple, or people love Google, people love eBay – [cross talk]
Ross Greenwood: – the other day that said that some people are actually more loyal to their phone brand Samsung or Apple than they are to their bank.
Shayne Elliott: I don’t doubt that for a minute and there’s a reason because it’s about convenience, it’s easy to use, it’s intuitive, it solves your real life problems. If you think of the bank as just another app on that phone, that’s great for ANZ. That’s great when you say, hey, I trust things on my phone, I trust technology and if my bank is an app and just gets all that done for me, easily, fantastic. That’s how you build loyalty and that’s how you build a brand that people love.
Ross Greenwood: You’re saying that you don’t need to have a human interface to engage with people to also engender loyalty?
Shayne Elliott: I think it helps, we talk about this concept of a bionic bank. You’ve got to have the best of human and the best of technology and they got to work really really well together. There will always be a role for people in a bank, in my view, because what we know is that when people, irrespective of who they are, how much money they have, how old they are, when they’re making a decision, a financial decision, of real importance to them, not to me, but to them, they still like talking to somebody.
Now, that might mean on the phone, it may mean through a chat but I don’t know. They still like to get confirmation and advice. There was always going to be a role for people in banking.
Ross Greenwood: One final question before I eventually take a break and then we’re going to take calls on 131873, otherwise you can come through our websites and send us an email via 3aw.comtoday u2gb.com 4bc.com@au. My final one is a lot of emphasis has been upon banks and their size and whether they’re too big to fail. Do you believe Australia’s banks are too big to fail and indeed is there safety in our banking system in Australia?
Shayne Elliott: Well, I think the banking system in Australia is incredibly safe. It’s incredibly well regulated. It’s well run. It’s something to be proud of and we’ve seen that time and time again, actually, through various crises around the world, that Australian banks have stood strong.
I think there was absolutely a tradeoff between, competition and stability, and we know the benefits of competition. I get it. I understand that it provides, potentially, lots of new innovation and price pressure. On the other we really need and we know we really need a stable financial system. When you get that wrong as a community, its all bets are off. It’s about balancing those two.
Ross Greenwood: You just told me that banks could be susceptible to disruption from technology, how does that balance with that stability?
Shayne Elliott: Well, that keeps us hungry, that keeps us really working hard. That’s why we invest billions of dollars every year in new technology and giving out great stuff to our customers, like the new payments platform, which is about to arrive.
Ross Greenwood: I was going to say, I just spotted that, the new payments platform that’s arriving, plus also you’ve just remodeled all of your apps. You put it out to a certain number of people. That’s all being redone, to integrate superannuation investments and also the banking platform as well. This is all part of trying to give people a one stop shop, isn’t it?
Shayne Elliott: Absolutely right. Exactly about delighting customers, making it easy and convenient to do those things. Today, it’s on their phone, who knows what it’ll be on in the future. It is about using technology to do great things for customers.
Ross Greenwood: Okay, we are going to take a break, we’re going to then take your calls on 131873. You’ve got the boss of the ANZ bank in here taking your calls. Let us know your experiences with the ANZ, or banks, in general. Your view about how you’ll bank in the future. Do you need a person to talk to or you’re just happy to be loyal to your bank as a result of the website or indeed your app on your phone? 131873.
Great to have your company here on Money News right across the country, with ANZ chief executive Shayne Elliott in our studios in 3AW in Melbourne. We’re taking your calls. Anything to do with your banking, what you’re happy with, what you’re not happy with. Indeed, what I also say is how do you become loyal to an organization that you don’t visit and see a person anymore? Is it the app? Is it the website? What is it? We want to try and investigate a bit of that and indeed the Royal Commission. What would you hope might come out of that perhaps as well?
Taking calls with us, thank you so much, by the way I’ll get there. I mentioned Kombucha before to people. Are you a Kombucha drinker?
Shayne Elliott: I’ve dabbled.
Ross Greenwood: [laughs] You can’t say you dabbled.
Shayne Elliott: I’ve dabbled. My wife likes the local organic store and they had it there on tap. I was quite intrigued. It’s an interesting experience, yes.
Ross Greenwood: It might be an acquired taste. I said to Alison Watkins, the boss of also Coca-Cola Amatil because she’s selling it. Both of us agreed that it wasn’t much shop, we don’t like it much. It’s best to be healthy and good for you but it’s one of the new trends in drinks apparently.
Okay, let’s go to Rod in Flemington first. Good Day, Rod, how are you doing?
Rod: Good evening, Ross, and Shayne. Just a quick question to Shayne. Monzo bank in UK is purely an online bank. Half a million customers in two years and doesn’t have the infrastructure required to run a branch network. How’s the ANZ going to counter or the Australian banks going to counter those competitors as they start to infiltrate the Australian market?
Shayne Elliott: That’s a really good question. In fact, they are infiltrating into our market. There is a segment of the community out there who that appeals to, who want that service. I imagine somebody like that’ll do very well here. My job is to make the ANZ proposition so great that you don’t want to shift. You don’t want to go there because whatever a Monzo or whoever, whatever they can do, you can do at ANZ as well. That is absolutely going to happen.
Ross Greenwood: Isn’t one of the allegations in the past, that banks basically locked us in? If you’ve got my mortgage, my savings accounts, my credit cards, the whole thing and made it very difficult to change. Is it easy for me to change banks these days or do I feel locked in?
Shayne Elliott: No, it’s a good question. I think possibly people are creatures a habit. You just get used to doing things in a certain way. The reality is the barriers to move are much lower than they used to be. There’s no fees, the paperwork’s easy. Banks have made it actually quite simple. You want to move your mortgage, your credit card, it’s a pretty simple thing to do.
Ross Greenwood: Rod seems on to something, am I penalized if I stay loyal to my bank?
Shayne Elliott: No. I think what he’s talking about there is and, again, I didn’t listen on your particular thing, it’s about, hey, I signed up to a mortgage. It’s a variable rate and you move it and a new customer walks in and I get a discount. Well, but that was the deal. It’s a variable rate mortgage. If you want certainty in a fixed rate, you want to know exactly what you’re paying, get a fixed rate mortgage.
Ross Greenwood: You’re telling customers, here, right now on the program that really, if they want the best rate, they’ve got to go and negotiate. They’ve got to badger for it because otherwise, they’re not necessarily going to get the best rate out there in the market or they got to move.
Shayne Elliott: Look, we’re in a real world. It’s no different than buying car. It’s no different than buying TV. You go in, there’s a sticker price and there’s lots of TVs to choose and you can negotiate usually with the store.
Ross Greenwood: There you go, negotiate hard. Rod in Flemington, thank you for that one. Let’s go to James, who’s in Canberra now. Good Day, James, how you doing?
James: Terrific, thanks, Ross and Good Evening, Shayne.
Shayne Elliott: Good evening.
James: Shayne, Look I bank with the ANZ, I’ve got an issue at the moment, but more importantly, in terms of your overall offsets, it’s doing the small things that I think the consumer actually wants. They want their banks to do well. It’s okay for you to talk about being one stop shop. In my case where you’ve got a mortgage, you got an investment property, you get sold landlords insurance.
Then when there’s a claim three years on, the ANZ blames who they’re underwriter for landlords insurance. I got to tell you, Shayne, you’ve lost us. I think you need to have a long hard look. The whole skeptical nature of why the consumer now considers the banks to be no longer their friend and how the industry’s basically been totally commoditized that it’s just all about the next buck.
Shayne Elliott: Look, I’m sorry that you had that experience and I take your point. Part of our strategy and I’m not saying we’ve got it all right. I’m not, for a minute, and I haven’t said that. I think that what we’ve got to do is exactly that. We have to pick a few things to do for our customers and do them really really well. The reality is at ANZ, i can’t speak for the others, we’ve been trying to do too many things.
When you try to do too many things, you don’t always do it very well. That’s exactly our strategy. We are not where we need to be. That is part of the reason we’ve been selling businesses, shutting down, rethinking who our partners are, because you mention insurance. We don’t make all the things that we offer our customers, we have to get into partnership with other people. We got to do a really good job of making sure that our partners stand up to the same standards that we want and that our customers expect. I get your point.
Ross Greenwood: Is it not unreasonable that James, with his situation, that you as James’s custodian to a certain extent, because he’s your client that if you could guide him through that process, he would come out of it far more loyal client, because you’ve helped him solve the problem as distinct from landing him with a problem.
Shayne Elliott: That is absolutely right and we know that.
Ross Greenwood: Because not everybody can have a private banker that they can go and ring up and solve a problem.
Shayne Elliott: They shouldn’t, no.
Ross Greenwood: For an ordinary customer, it makes it difficult, because of the time spent and the frustration dealt with.
Shayne Elliott: Yes, and I get that. Again, you are talking exactly about the complexity of what we do which says, hey. We’re not the insurer, we’re offering a third party’s product. When something goes wrong, unfortunately, we have to navigate. We’re in the middle and we want to do the right thing by customers but he’s got a point, I’m not denying that.
Ross Greenwood: James of Canberra, thank you so much for that one. Let’s go to Simon, who’s is in Hello Simon?
Simon: Hello, can you hear me, Ross?
Ross Greenwood: Just. Now, if you can down your radio, that’d be great, thank you.
Simon: Okay, is that better?
Ross Greenwood: Perfect.
Simon: Okay. I don’t get it. I was in Hanoi last week and ANZ used to have the best AGM position in Hanoi, next to center. Suddenly they’ve surrendered that. That one one of the main reasons I went with ANZ because they had a Asian coverage. They’re not going to do that anymore. The bankers, you say that you want to do the best of both. You want have first people call you, deal with you or you want to deal on the internet, I don’t care, but your people do not ring back. Your people do not call back, you are losing coverage. I don’t get it, I don’t get what the direction of ANZ is anymore.
Ross Greenwood: Okay, Simon, hang on there. Well, let’s hear from the boss.
Shayne Elliott: Yes, well, look I’m sorry that that’s your experience. Again, I see the stats. We don’t get it right all the time, we do call customers back,in fact, we take tens of thousands of calls every single day. Generally, the Asia experience your talking about our business in Vietnam, there in Hanoi. Look, we took a strategic decision, again, that if we want to be really really good at something, our first priority is really really good for people who want to buy and own a home or start to run a small business here in Australia.
Again, guys, I can’t do everything. We looked at our business in Asia and said, you know what, it’s good little business but we need to put all our resources, our money, our thinking, our best people on being the best we can, where we can win which is here at home. We decided to sell those businesses. I know that some customers will miss them but it was the right thing to do.
Ross Greenwood: Okay, let’s go to next to Mark who’s in Thornlie, Mark, how are you doing?
Mark: Good, mate, how are you?
Ross Greenwood: Good thank you. Thanks for the call.
Mark: I’m just wondering if you guys are going to increase your mortgage broking team or, you going to decrease your mortgage brokers?
Shayne Elliott: At ANZ, we don’t own any mortgage brokers. we’re the only major who doesn’t. We don’t own or run any mortgage brokers.
Ross Greenwood: In that regard, you use mortgage brokers to get home loans to actually have them come in, you’ll take their business, right?
Shayne Elliott: Absolutely, yes. What happens today actually, Australians vote with their feet. More than half of all new mortgages, people want a mortgage they go to a broker today. That’s up strongly and it continues to rise, because they get what they perceive to be good service out of that. Then yes, many cases hopefully, the brokers recommend that you come to ANZ.
Ross Greenwood: Just a strange one, Aussie home loans, which John, we have have him on the program regularly, are owned by the Commonwealth Bank-
Shayne Elliott: 100%.
Ross Greenwood: – would you take mortgages from Aussie home loans, for example.
Shayne Elliott: Absolutely, we do. We got a great relationship with Aussie home loans and I think, John, if you asked him next time, we’ve been one of their most consistent partners over a long period of time.
Ross Greenwood: All right, let’s keep on going, Debbie’s in McMahons Point. Good Day, Debbie.
Debbie: Hello. I have a question. I have a savings account with the ANZ bank, and I’ve been a customer for 50 years. With my savings account, you get about 1% interest but if you go into the bank every couple of months, it’s not rolling it over but if you have to go the bank every couple of months and you get 2.8 interest. If you don’t go into the bank, it just drops back to the 1% interest.
My question is why should I not go to ING, that’s offering 2.8% where I don’t have to do anything.
Ross Greenwood: Not a bad question. I got to say, Debbie, not a bad question.
Shayne : Well, it’s not a bad question and first of all, thank you for being with us for 50 years. I don’t know the details of that and those particular accounts you’re talking about and whether the 2.8% is because you’re depositing your money for say, three months or something on a fix term. We have a wide range of savings products, some are lower interest that others. I don’t really know is it Debbie? If you send me your details I’m happy to look into the specifics of your case. I’ve given out my e-mail address before online so it’s email@example.com and if you send it through to me I’ll make sure we look into it.
Ross Greenwood: There you go Debbie. 50 years service, you might not even get a gold star, you never know quite what you get out of it so that’ll be quite nice as well. Look, I’m going to give you the soft one last. Alex is in. Alex has got a different story to tell. Hello, Alex, how are you?
Alex: I’m very well, thank you boys. I’m just ringing up to say, the personal service I get at my bank, which is ANZ. When I walk through the door everyone smiles at me, I’m greeted and obviously the same it might be somebody else but I wait to see him, because he knows me and he’s got that personal touch and I must say, I can’t speak more highly of that branch, which is.
Ross Greenwood: Okay, Alex can I ask you one small question because you’re obviously are a regular visitor to a bank branch, how old are you out of interest – [cross talk]
Alex: – once a fortnight.
Ross Greenwood: Okay. How old are you, Alex?
Alex: Early ’70s.
Ross Greenwood: Early ’70s. Do you have an app on your phone that you can use the ANZ banking app?
Alex: I’m sorry?
Ross Greenwood: Do you have an app on your mobile phone?
Ross Greenwood: You don’t. Do you use online banking, say for example?
Alex: No, I don’t.
Ross Greenwood: Do you still have a checkbook?
Alex: I do.
Ross Greenwood: You see, my point is, Alex, that these days you, I’m putting you in banking terms, you’re almost a dinosaur, Alex, because you do the things that people did in the old days. Is Alex a dinosaur?
Shayne Elliott: No, Alex is a representative of a very, very important part of the community because as a gross generalization, but it’s generally people in Alex’s situation who are to savers they’re the people who have the deposits and they’re the people who, actually, it’s their money that we’re be able to go out and lend out to first home buyers and others. Superannuitants, older people, retirees, really really critical. We’re very, very aware that many in that community like branch banking.
Ross Greenwood: They need to go in the branches, which is the reason why you still need to have people, why you need to have staff and all of those types of things.
Shayne Elliott: Absolutely.
Ross Greenwood: I’m going to leave it there because we’ve got to keep on moving. I’ve got a full board of calls, we could’ve done this all night, but it’s an important subject and we’ll come back and do it again with Shayne Elliott.
The reason for that obviously is there’s a hearts and minds campaign going on here. Clearly banks want you to like them. Clearly there are issues inside banks that have to be addressed and they’re very big organizations, and they’re subject to competitive pressures, but the fact of the matter is we need our banks and we need them strong.
They’re an important cornerstone of our community. Shayne Elliott is the Chief Executive of the ANZ Bank and Shayne, many thanks for you time.
Shayne Elliott: Thank you very much.
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