In a recent episode of Accenture’s Hear+Beyond Podcast, Australian Banking Association CEO Anna Bligh discussed the role of the banking sector during the COVID crisis. As Bligh explained, COVID has given banks an opportunity to rebuild customer trust after the damaging events of the Finance Services Royal Commission.
Shaping the economy’s recovery
During COVID, thousands of Australians have found themselves in difficult and unexpected financial situations, through no fault of their own. Banks are playing – and will need to continue to play – a key role in picking up the pieces.
According to Bligh, the role of the banking sector will be primarily “to do everything it can to support not only the customers of individual banks but to support the economy as we pull our way out of it, hopefully together.”
The many Australians who have been impacted financially by COVID will need time to get back on their feet and support in the form of restructured loans and deferred repayments.
Then there is the need for new and growing businesses to emerge as part of the recovery process. “We’re not going to get out of this economic situation unless we have businesses that can grow, expand, employ more people, change their business model and become bigger. Ensuring the appropriate, effective and efficient flow of credit into the economy is going to be a very critical part of all of this,” Bligh says.
Her comments reflect the predictions of Accenture’s Senior Industry Director for Banking Alan McIntyre, who forecast smart credit quality management as a key trend for banking in 2021 in the early part of this year.
Flexibility and lenience are key
In the past, if a business has been without income for a period of several months, it has been relatively easy for banks to determine their suitability for credit. The difficulty COVID has presented is that going for several months without income doesn’t forecast an inability to bounce back. Figuring this out will take “A lot of care, thought, forbearance and empathy,” according to Bligh.
Flexibility and lenience will be key as banks reassure their clients that nobody is hoping they will close their doors for good.
“Banks grow, expand and make money through businesses growing, expanding and taking on more credit,” says Bligh, “The best interest of the bank is getting customers back on their feet as quickly and reasonably as they can. Hopefully, we can minimise the damage that COVID has brought.”
Improving customer experience
The face of banking is changing. As Bligh explains, “For many Australians, having access to internet banking has made it a hundred times more accessible. But managing the transition has to be done carefully, and of course, not all of that technology is accessible by everybody. Touch screen use for the vision impaired is an example.”
“Every time a bank, whether it’s an existing one or a new one, finds a different and better way for their customers to access their services and products, everybody else is looking over the fence and thinking, “Well, how do I do that?” That’s a good thing for all of us.”
While there was a concerted effort to shift commercial banking even further into digital territories last year, Accenture’s Commercial Banking Lead for Australia and New Zealand, Chris Jaggard, notes that banks are yet to translate these efforts into “existing technology, capabilities or culture”.
“In 2021, the commercial banks that make the pivot to the future, develop a clear and forceful strategy to deploy digital to their clients, and simultaneously shore up their digital foundation, will be set to own the Roaring Digital ‘20s,” he continued.
This checks out with Alan McIntyre’s trends for consumer banking, which offers blueprints for banks making a full digital transition. With the COVID crisis continuing to ramp up due to the Delta strain of the virus, improving the customer experience without physical interaction is more important now than it was when these trends were published back in February.
Leveraging lessons from the past
The Global Financial Crisis and Finance Services Royal Commission were, in some ways, the ideal precursors to the current state of economic difficulty.
“The banks have certainly come into the COVID experience with a lot of financial firepower because they’d been building up capital buffers since the GFC. They had that financial firepower to act as a shock absorber so that households and small businesses didn’t have to absorb the shock,” says Bligh.
What’s essential now is that the banks take collective responsibility and capture the opportunity to rewrite their narrative and establish trust that was eroded by the Royal Commission.
Bligh says during COVID, it is important for Australia’s banks to have “One message and one package of support.”
When the crisis hit and the country began to shut down, “Banks made the call to put down the competitive instinct and act together and cooperate in the public interest,” Bligh says. “If 15 banks all went out with a different proposition, it would have been terrible.”
“We knew instantly we needed one message, one package of support, and that people needed to know, they needed the comfort, that it didn’t matter who they had chosen to bank with, they were going to be looked after in the same way.”
“When you do come together on the right things, there’s a lot of resources in banks, there’s a lot of capability. There’s a lot of firepower. If you harness that collectively and point it in the right direction, you can make something really important happen.”
Bligh explains that there has been strong leadership from individual leaders of banks in the last 12 months to two years on big issues including cultural change and their role in the community. “I think there is growing mistrust in the Australian community about corporations generally and banks get touched with that as well.”
According to Accenture, just 29%of Australian respondents trust their banks to look after their long-term financial wellbeing, compared with 43% in 2018. This reflects Bligh’s comments that “The trust and respect of the community are going to be even more important over the next decade.”
During COVID, different approaches have to be taken and rules rapidly changed to serve the best interests of the public.
“I always admire, when corporate Australia and governments are able to put their best foot forward and work together. That’s when you get really good outcomes,” says Bligh.