"One of the things we need to do is change the mindset from thinking that we know everything and can do everything internally. We need to accept the fact that a better outcome might result from partnering. For example, we have partnered with Moven – a New York startup that offers a budget tool. We have licensing rights in New Zealand – a perfect example of why we shouldn't be afraid to partner with people who have better ideas."
A big organisation with legacy systems needs to think like a startup, and we are going to be a 200-year-old startup. We have to, to survive, because otherwise a startup will eat our lunch. There is a real risk to banking now that never existed before. The risk is that 50 people may come along and take a bite off the value chain – not that someone is going to come along and build a massive Westpac. Essentially we risk being eaten by 1,000 piranhas instead of one single shark.
One of the things we need to do is change the mindset from thinking that we know everything and can do everything internally. We need to accept the fact that a better outcome might result from partnering. For example, we have partnered with Moven – a New York startup that offers a budget tool. We have licensing rights in New Zealand – a perfect example of why we shouldn't be afraid to partner with people who have better ideas. I think the previous model wasn't really partnering; it was supplying. Partnerships are quite different now, which I think is quite challenging for organisations. There is a huge imbalance between us and the people we are likely to partner with – a dozen people versus a mighty great bank for example.
There is no doubt that we need to take into account wider stakeholder expectations and our impact on society in the banking sector. This has come from the Global Financial Crisis, the behaviour of banks around the world and society's reaction. This implies we have a social licence to operate. If you lose that trust within society, especially within a sector such as banking, then life can become very difficult, if not impossible for you. Our purpose is really helping New Zealanders prosper and grow with our financial services.
Technology increasingly is going to transfer more and more power to the consumer. Not just for banking, but banking has had to shift a lot more than other industries. There will be better artificial intelligence (AI), better use of data, people will have a clearer understanding of what they are getting and they will know whether it is the best deal in the market or not. Customer loyalty will be harder to earn – I wouldn't say this is the end of it because people still put faith in brands. You are going to have to earn your loyalty with genuinely providing people with better service.
You must have the financial measures which, for us, used to be everything. Diversity is very important for us, as well as things like environmental, health and safety, etc. We announced at the end of last year, at a group level, that we are committed to a 2 degree economy. We have committed to try and align our lending to contribute to no more than a 2 degree increase in global warming. We also decided last year that we won't bank people who are payday lenders. Many of them are exploiters of the poorest people in society. We have aligned it to our obligations to the responsible lending code.