Commonwealth Bank CEO Matt Comyn’s address to the Trans-Tasman Business Circle.
Thanks very much Tony for the kind introduction. I have had the opportunity to work with Tony for many years and I appreciate the support today on all other days. I did want to start by first acknowledging the Gadigal people of the Eora Nation, the traditional custodians of the land in which we are meeting today, and to pay my respects to their Elders both past and present, and at any other indigenous Australians that are with us today. I did also want to briefly thank Johnny and the team. As a longstanding Trans-Tasman company I am very proud to be here today, and using the opportunity to speak to the business circle.
As Tony alluded to in the introduction to my speech was very much looking at the history of the Commonwealth Bank, which as he faithfully represented actually originated from a banking crisis in the late 1890s where the private banks actually failed, and the newly established Federation of Australia, a decade later, actually finally passed an Act of Parliament, which in effect was to implement a new financial institution and certainly a critical part of what they thought at the time to ensure that the banking system which was broken was then fixed.
That Act of Parliament was actually passed on 22 of December 1911. We first opened our branch in July 1912 in Melbourne. And the mandate that was set in place at that time for the Commonwealth Bank was very clear. There were three elements to it. The Commonwealth Bank was to be a bank for all Australians. It was to be a bank for businesses. To help them grow, and for the economy to flourish. And it was to be a bank for the country. To see all people prosper, and of which the nation should be proud.
I have thought about the role coming into it, really reflecting on the past, I think those three critical elements are just as important today as they were then, and in effect being a really a guiding light to what the organisation should and has tried to stand for over more than 100 years.
We see that very much as the purpose of the organisation. We encapsulate those three elements very much around improving financial wellbeing of our customers and our communities. And it is really that that I want to talk about today, particularly as the context has shifted. What the Commonwealth Bank has been able to do during that period is adapt to various changes, whether they be World Wars, very tough economic conditions, the failure of the state banks in the early ’90s, and of course the rapid adoption of a lot of technology. And before I shift to talking about how that simple purpose is going to be relevant in the context we are going to face over the next decade, I did want to spend a few moments talking specifically around the point of trust.
I have had the opportunity, since coming into the role, to speak with many of our customers. I wrote out to more than eight million of them last year. We have brought customers into all of our individual leadership forums. I hosted more than 50 customers just last week, and have met with many on a one on one basis. From our perspective it is all about making sure that we are embracing a different mindset inside the organisation, that we are getting from the top, right through, very close to our customers and really understanding, making sure we are listening and hearing what is on their mind. Making sure that we are understanding any problems and really getting to the bottom of those issues, and then making sure that we are going through and fixing them where they arise. But most importantly embracing the full benefit of both our technology and of our people to deliver the best possible experience for our customers.
As we have thought about the concept of trust, we have really thought about it in the context of trust as being something that we earn, and it is something that is an outcome. So for us inside the Commonwealth Bank, this very simple thing that we want to focus on making sure that we are trustworthy as an organisation and as individuals. And there are three important elements to that. Firstly, we have to be capable and reliable. We just have to get things right. Secondly, we have to be transparent, and we have to make sure that we are doing the right thing for our customers and for the community. And thirdly, we need to make sure that we are delivering better outcomes for our customers and the communities that we serve. And beyond these three principles, what we are really going to be measured on over time is going to be our consistency: of intent, our consistency of actions, and importantly our consistency of outcomes.
Specifically around some of the steps that we are taking at the moment to ensure that we are getting things right and that we are doing the right thing, we are making big investments in our systems, making sure that we are delivering for our customers, and things are working inside our business as they should. We are more than halfway through the key milestones in response to the Prudential Inquiry, which looked very closely at key elements that needed to be improved around our governance, risk management, and culture. Unfortunately it has been necessary for us to refund $600 million to our customers over the last few years. And we are working very quickly to ensure that we are refunding our customers in full as quickly as possible. This has meant that we are going to refund at least $200 million and up to $500 million this calendar year.
And lastly we have made some really proactive choices about what products and services we want to offer our customers, how we want to bring those to market, what fees we would like to charge, and also, we have made real investments in and around transparency, to make sure that our customers feel that we are delivering good value and better outcomes for them. In our quarterly result a couple of weeks ago we talked about the costs of those various choices, which was $415 million per year. But we think it is a critical element, brought together as I said in ensuring there is both consistency of intent, consistency of actions, and consistency of outcomes.
But beyond just doing the right thing and making sure we are getting things right, we have to, as I said earlier, make sure we are delivering better outcomes for our customers and our communities. That we are a bank for all Australians, that we are a bank for businesses, and that we are a bank for the country. And I would like to spend some time talking about each of those now.
Being a bank for all Australians starts with our people. It is a privilege to lead the Commonwealth Bank of Australia, and our more than 48,000 people who are part of the organisation. One of the worst aspects actually of this role over the last year or so, has been seeing our people up close who have really borne the brunt of our customers’ anger. We have seen record incidents of aggressive and abusive cases, and our people quite rightly feel let down. I am proud of them because of the work that they do, and of course I am very sorry for the situation that we have put them in. But our commitment to making sure that we move forward as an organisation and something that they are proud of, and something that we really feel that we are contributing to, is a very important part of my role, and of course leaders throughout the organisation.
So as we have tried to really harness some of their thoughts and feedback, and working closely with them, we have really thought about what is that actually going to mean for many of our customers, and how do we make sure that we are making the right balances and trade-offs?
One of those opportunities in having written to eight million customers and having responses from almost 14,000, is going through a number of those and really seeing up close some of the very different expectations that are required for a bank for all Australians. Now firstly as you would expect a number of customers wrote to me specifically around the branch network. One of those customers finished off his letter saying “I am sure I will never hear from you again, but here are my thoughts”. I was lucky enough to catch him as he was mowing the lawn, he lives up on the north coast of New South Wales.
He was very focused about the branch that was in close proximity to him, knowing that the number of branches has been and will continue to reduce over time. Actually just the most important thing in his mind, and he is not alone, that I can do in my role is making sure that there is a branch in reasonable proximity to where he lives. We had a really good conversation about how I thought banking would change, but also in my mind a real commitment for us is even as the number of branches reduce, and the number of physical points of presence, we will right retain and maintain a very large branch network, and the largest in the country.
The second is, as we have thought about simplifying the products and services that we offer, trying to remove some of the products and the duplication and some of the complexity, which of course has some benefits for the organisation in terms of lower cost and lower risk to manage. One of the very topical areas is around particularly the provision of passbooks. We get asked this question regularly, often at the AGM. In fact every year at the AGM. We have more than 400,000 passbook holders, very loyal customers, which we stopped selling or providing the passbook account more than a decade ago. We have tried for many years as a part of that decade to help customers transition from the passbook. And I can remember in the last couple of years we did another piece of research trialling some different offers that we thought may be able to encourage some of our customers. And the research that came back was, overwhelmingly do not do it.
One of the verbatim which always sticks in my mind is from one of our customers which was, “I hope I die before the Commonwealth Bank takes away my passbook.” We are talking with the research firm and when you have got customers preferencing death over the cessation of a product or service, it feels like a pretty difficult area to go after. So I am very confident that we will continue to offer passbooks during my tenure within the organisation, notwithstanding of course there will be changes in other areas.
