Addressing shareholders at the major bank’s annual general meeting (AGM) in Melbourne on Wednesday, NAB chief executive Andrew Thorburn outlined four reasons why he believes the bank has “drifted”.
“Firstly, the primary focus shifted away from customers,” Mr Thorburn said. “This has left our industry open to the challenge of putting profits before people. Ultimately, the interests of our shareholders are aligned with the interests of our customers. This is how a sustainable business is built.”
Secondly, the NAB boss noted how the group had moved from a long-term view to a short-term one.
“Given the risks and nature of our business, we should be planning over a five to 10-year horizon, not just one to two years,” he said.
“Thirdly, the move from base pay to greater incentive compensation hasn’t been managed carefully enough, and has, at times, rewarded the wrong behaviours, and focused on product sales and short-term growth. We have taken actions in this area, and will continue to make changes.”
Finally, Mr Thorburn said banks have become bound by internal rules, policies, regulation and legacy systems that have led to inertia.
“As a result we lost the local connections we previously had,” he said.
Like its big four peer ANZ, NAB is undergoing a transformation process to become a simpler bank. Mr Thorburn said the company will invest $4.5 billion over three years to make NAB “simpler and faster, less bureaucratic, with more efficient and reliable systems so we are able to deliver a better experience to our customers”.
“To reduce compliance, complexity and cost, we have reduced the number of products we offer. We are migrating to new technologies, including cloud, to deliver greater speed and resilience at a lower cost. In total, we are on track to achieve $1 billion in cost savings by 2020,” he noted.
“We aim, by the end of calendar year 2019, to separate MLC Wealth – to enable us to focus on a simpler wealth offering through nabtrade and JBWere. This has been assisted greatly by the appointment of Geoff Lloyd as CEO of MLC in September.”
Divesting its wealth business and reducing its product range aren’t the only measures NAB is taking to correct its ways. Significant leadership changes were made at the bank in 2018, including the departure of former MLC executive Andrew Hagger in early October.
It absolutely stagers me that MLC increases its Risk insurance rates by 10%-15% in March 2019, at the same time commissions drop to another level in 2019 ?!?!?!? I really thought the RC made the point “Profits before People” ?? Whatever happened to the theory, “rebate the commission and the premium reduces ? ” Best I start charging all those willing prospects that love to pay fee for service for Risk products, yippy !! I can hear them knocking down the doors….. Its appauling !!
First of all Thorburn needs to explain the unpaid trip to Fiji and the Thermofix and why he thought the Human Group was giving them to him.
Banks produce nothing and lend out money they never had in the first place. When you have privately owned banks they are always going to put profits before people.
Shareholders dont care how happy the clients are as long as they get a good dividend and share price increases (neither of which are linked to customer satisfaction).
Bank managers/executives/sales staff dont get paid bonuses on how many people left the bank smiling, they are paid on achieving sales targets. Once they hit their targets they can get their bonuses and go work somewhere else.
As long as you have privately (internationally) owned banks the customer will never be put above SHORT TERM PROFITS.
To all the banks and AMP,
Thanks for f*@#ing up our industry you greedy bastards!
You’re way too polite…
Funny , I worked at NAB FP for 10 years . We met the then new Victorian NAB Victorian bank state manager 7 years ago who was a breath of fresh air . He said ” We are changing the culture putting the clients first and then staff followed by the bank . If the staff are happy and the clients are happy , then the bank will prosper and do well ” . 3 months later he was sacked!!!! How long now will Thornburn last saying what he just said . I will give him 6 months ???