David Gonski, the chairman of the ANZ Bank, believes the anger, disillusionment and disdain directed at banks is at least partly due to general worry about jobs and the future.
He says there’s a growing gap in trust between the banks and their customers.
“Banks face many challenges but perhaps none is as fundamental as maintaining the support of society for the functions we perform,” he says.
“Let me be clear. ANZ has not been immune from this. And let me be equally clear. We get it. We know we need to change and we are changing.”
Australia’s big four banks have been hit by a series of scandals, including bad advice from financial planners and unjustly withholding payouts on insurance.
And the bank CEOs were called before a parliamentary inquiry to explain why interest rate cuts hadn’t been passed on in full to customers
The big four banks are also suffering from a slowing in revenue growth, smaller margins and more bad loans. They delivered combined 2016 cash profit of $29.6 billion, a decrease of 2.5% on last year, breaking a run of record profits since the GFC.
In an address to the annual general meeting today, the ANZ’s Gonski told shareholders the challenges to reputation are partly of the banking industry’s own making.
A lack of trust
“This reflects a general lack of trust, and even anger, at major institutions,” he says.
“Many Australians have also become disengaged from our major political parties and are seeking a different ‘voice’ in the political system.
“Despite the Australian economy being healthy by global standards, many Australians are worried about their jobs and the future of the country.
“They feel that their children are now less likely to have a better life than they did. The cost of living is a regular topic of discussion around the dinner table, and many people describe themselves as struggling to get ahead financially.”
Gonski says people see a growing disparity between the reality of their lives and how political and business leaders live and talk.
Resentment and frustration
“There is a large degree of resentment and frustration evident which is manifesting itself in disillusionment and disdain for politicians and for us in business,” he says.
“Quite obviously, the major banks are bearing the brunt of this at present.”
He believes large institutions have been slower than they should to listen more to the views of the community and to treat all of their customers fairly and responsibly.
“In accepting fault on the part of the bank, I do note that many who criticize banks and large businesses often forget that these organisations are made up of thousands of people who come to work every day and try very hard to do their job as best they can,” he says.
“When you look at the banks, there is no doubt that mistakes have and will be made.”
And he says the tradition of business has been to try to keep mistakes in-house and not kept customers and the public fully informed.
“Some have said this is the arrogance of big business,” he says. “Others have said it is their power. I am not sure it is either of those but this pattern of behaviour can and must be changed.”
CEO Shayne Elliott also spoke of trust.
“There’s a mood of distrust, resentment and frustration about big business and banks in particular,” he says.
“While criticism of banks isn’t new, we’ve mistakenly reassured ourselves that things can’t be that bad.”