May 19, 2022
  • May 19, 2022

CBA and NAB outpace other banks on technology investments

By on February 11, 2022 0

“We took a step back from aggressive pricing when COVID-19 hit and to be honest we expected everyone else to do the same, but came back once we knew we could actually serve volumes,” Ms. Slade said.

“We don’t lead on price, but we give our approval quickly and confidently, so people choose to stay.”

All banks pointed to a shift in customer preferences towards digital banking services during the pandemic, with the CBA planning to take a closer look at its branch network and footprint accordingly.

Permanent changes

Ms. Slade said many of the changes NAB had incorporated because of COVID-19 would become permanent.

“COVID-19 really gave us the opportunity to test what we could do in terms of using data and technology to transform customer experiences,” she said. “These things have a lasting impact, like video loan appointments, which are about 40% of our total now.”

New and existing customers can get unconditional approval in video chat, resulting in much faster approval times overall.

“All the data to verify revenue is already there, so you just have to be able to digest it all and categorize it. Already 50% of our customers get unconditional approval within the same day and 30% of eligible ones are approved within the hour,” she said.

While that growth is now established in NAB-owned channels, Ms. Slade said the focus will be on rolling out similar initiatives through the broker channel.

Brokers account for about half of NAB’s mortgages, and applying the faster approval system to this channel would be a focus for the remainder of this year.

“For PAYG customers, we are expanding into more areas and doing the same with brokers, where lending would have no hands on operations,” she said.

CBA head of retail banking and services Angus Sullivan said faster processing times helped the bank gain share. He gave an example where a loan was applied for and settled on the same day.

“It’s rare for a customer to need to pay the same day, but it’s the confidence this gives our employees that we can support our customer,” Sullivan said.

Investors say technology spending really set banks apart in the last round of earnings.

Will Curtayne of Milford Asset Management says banks should continue to invest in technology. Louise Kennerley

“If they have simple, efficient systems, they’ll find it much easier to serve their customers and gain market share without having to compete aggressively on price,” Curtayne said.

He said that although the ABC maintained its leadership, the NAB was moving in the right direction.

“Over the past few years, NAB has significantly improved its technology and is now under [chief executive] Ross McEwan … became a clear number two,” Mr. Curtayne said.

“Westpac and ANZ have a big catch-up investment to make there.”

Fare Warnings

The specter of rising interest rates has left most banks bracing for tailwinds, with ANZ saying it would expect a boost from New Zealand’s rises. feel in the next trimester. However, there were warnings against the Reserve Bank of Australia moving too quickly.

Both the NAB and CBA bosses said rate hikes should be gradual, with Westpac’s Peter King saying any move by the RBA would only happen if the economy was doing well.

With NAB customers on average four years ahead of repayments across the entire mortgage portfolio, Ms Slade said there had been a 10 per cent increase in clearing account balances compared to accounts. savings, and that clients were therefore in a good position to break out of the cycle.

“You have a lot of rate increases before you’re in those stress levels,” she said.

Ms Slade said any further macroprudential measures to reduce debt-to-income ratios would need to be carefully considered, so as not to disproportionately impact business owners.

“We should wait to see the impacts of the buffer changes that came in November first. House price growth is already slowing,” Ms Slade said.

“Is this activity inherently more risky? I am not convinced [debt to income is] the best leverage.