One of the surprise big stories of the week was the appointment of Matt Comyn to the top job of heading up the Commonwealth Bank of Australia. This decision by the board flew in the face of media expectations that the bank had to find an outsider to fix things up after an “annus horribilis” for the CBA, which has culminated in the Royal Commission into the banks and other financial players, which starts this month.
I know Matt and he’s an exceptional performer. And that’s why as a 42-year old he was always expected to become the CEO of the CBA. His hopes of wearing the ‘crown’ of Australia’s biggest bank seemed to be whisked away when the Austrac scandal became big news, hot on the heels of other cases of the bank behaving badly linked to CommInsure and rogue financial planners.
The pressure of the mistake-ridden year reflected on the bank’s current boss, Ian Narev, who was often seen as a wunderkind banker — computer savvy and very new age. Under his guidance, the bank’s share price nearly hit $100. It’s now $80 and this 25% fall quantifies what a bad year or so Ian and the bank have endured.
To those who have been bashed by banks, it probably looks way overdue, and the performance of banks over the decades explain why we are a nation of bank bashers. As a country, we love the great get even, and to many this Royal Commission is exactly that!
Against popular opinion, I really want to love our banks because they are so damn important but I accept that they have to become more loveable!
Let’s face it, banks play an important role in our material and social world. They generally make our home-buying dreams come true, such that many homebuyers won’t even compare lenders interest rates and loans because the whole getting the property is such a big, exciting deal.
It provides comfort and gives security to future dreams of growing wealth and being well-heeled in retirement.
A bank is a make or break player in the lives of small business owners and all too often they are portrayed as dream-takers. However, in reality they do more favours to business-builders, numerically speaking (albeit on the back of holding their homes hostage) by providing the money to grow their operations, than they do killing aspiring entrepreneurs.
My mates in the media play up the bad stories, as they should, to keep all bastards honest, but they do ignore the good banking stories because who wants to think banks aren't all bad?
The best case for liking our banks was during the GFC where their practices were so much better than most banks around the world and so the Big Four ended up in the top 10 in the world!
Sure they were helped by us, the taxpayers backing them via the Government, but the bottom line was we avoided a recession and 10% unemployment partly because our banks had played a smart and safe game compared to some of the biggest banking names in the world including Citi, Deutsche, Bank of America, Barclays and so on.
Like a regularly misbehaving child, who surprisingly behaves exceptionally well in public, our banks did do us proud in the GFC and so unemployment did not go over 6%!
But that was then. This is now, and Matt Comyn and all of our relatively new bank CEOs — Shayne Ellliott at ANZ, Andrew Thorburn at NAB and Brian Hartzer — need to bring a new banking game to the table and Matt needs to lead the way as he takes over the CBA in April.
Many years ago, I addressed the World Congress of Credit Unions here in Sydney and opened my speech by asking who was the greatest bankers of all time?
I put forward names such as the Fed’s Alan Greenspan, CBA’s David Murray, J.P.Morgan and others, and I asked for audience feedback. After a few responses, I revealed my choice being Milburn Drysdale, the banker of Jed Clampett in that great TV show The Berverly Hillbillies!
Google calls him a “fictional banker” and that’s one of the greatest tragedies of modern banking.
Milburn would have sold his family into slavery for Jed and that’s what bankers have to get back to. Even if Matt has to do it electronically as the future might demand, the customer has to come first and even if it costs money in the short-term, the history of business says the consumer should be king.
Yep the crown needs to come off Matt’s head and he needs to put it on the collective head of his customers.
The great US business thinker, Jay Abraham, explained to me in the 1990s that smart businesses don’t burn their customers in the short-term because they should look at the long-term value of their relationship.
The banks have lost customers big time over the last three decades, such that mortgage brokers now write 51% of all new home loans. Sure, a lot of these loans go back to banks, but they are now sharing their profits with people who customers think have their best interests at heart.
The greatest bank slayer of all time in Australia, and maybe in the world, was John Symond who created Aussie Home Loans. He served it up to the CBA and other big four banks chopping 2% of home loans in the 1990s and using the media to regularly tell us that, “At Aussie, we’ll save you!”
It was a double message and it was fully intended, he told me some years ago. On one hand, Aussie would save customers money, but secondly, they would save them from the clutches of the banks!
It was classic “know your customers” stuff and John once explained what he told his staff: “People will forget what you’ve done but they will never forget how you made them feel.”
Banks have ignored our long-term relationship and haven’t cared enough about how we feel.
Matt Comyn has to leverage off what he’s learnt about efficient, money-making banking over the many years he has spent at the bank for the share price and the super funds that hold CBA stocks but he has to get the feelings right and happening.
He has to get outside the square when it comes to winning back customer love — it’s a massive task and maybe he should go to YouTube to check out a few episodes of The Beverly Hillbillies.
I reckon he could learn more from Milburn Drysdale than he could from many bankers in the world today.
P.S. When Ralph Norris took over the CBA in 2005 he told the media he wanted to make the bank best for consumers. As a consequence, I reminded him of what a job he had ahead of him, and to my surprise he invited me in for a cup of tea to see if I could teach him a thing or two. He also assured me he was fair dinkum about lifting the bank’s game and the meet and greet was outside the square.
I wont pass judgment on his efforts, but let’s just say it was the right intention. However I suspect changing banks is a task for unbelievably, exceptional leaders.