Westpac chief of consumer banking George Frazis has unveiled an overhaul of legacy bank account features, the latest initiative to meet evolving community expectations amid growing competition from “formidable” technology companies.
In a speech today, Mr Frazis revealed all personal transaction accounts would soon have unlimited free transactions after the removal of fees and volume caps on some older accounts that included charges after a certain number of free transactions each month, created before the explosion of banking via mobile phones.
Also from November 1, the bank would cap monthly “account keeping fees” on all personal transaction accounts at $5 per month.
“These changes are all about simplicity and transparency,” Mr Frazis told the Trans-Tasman event, noting that it comes as the bank undertakes a wider review of products, processes and policies. “But this is just the start. We will continue to make changes so customers can be confident that we are always working in their interests.”
The overhaul of personal accounts follows Westpac and other banks' recent move to scrap ATM fees for non-customers.
As technological advances “disrupt” several industries, Mr Frazis said banks would get “left behind” if they didn’t offer services that were intuitive, easy-to-use, quick to access, and personalised. He cited the entrance of Google and Apple into the payments market via digital wallets, noting the latter’s decision to restrict access to the chips in iPhones that allow contactless payments, which has drawn criticism from some banks, including Westpac.
“These big tech companies are formidable,” he said.
“Even the largest Australian company is not in the same league as a tech giant. Apple’s market cap is more than $US800 billion. That is twice the combined market cap of Westpac, ANZ, NAB and CBA.
“And this is not just paper money; Apple has more than $US250 billion in cash reserves.
“So while it’s an issue, we aren’t letting it get in the way of our mission to meet wants, needs and expectations. Because Google and Apple don’t have a monopoly on good ideas or service in a competitive market.”
Alongside the growth in start-up “fintech” companies in the past decade targeting slices of the financial services market, large technology companies are starting to broaden their activities. For example, Amazon is offering small business loans, following similar moves by eBay-owned PayPal.
Mr Frazis said while the potential for disruption was “massive”, the digital revolution had only just begun and the winners would be those with the right leadership willing to disrupt themselves and respond to customers’ changing needs, as Westpac had done.
The full impact of data analytics, artificial intelligence, cloud and open platforms, robotics and new interactive interfaces, and ubiquitous digitisation was yet to be seen, he added. And the requirement to continually adapt rapidly was made even more difficult amid increasing regulation and waning trust, often due to banks’ own shortcomings.
“In short, business as usual is not an option. Change is required,” he said. “For me, change comes down to culture…(And) culture is about an inherent commitment to always doing the right thing.”
At a Westpac event in August, Westpac group executive business banking, David Lindberg, described automation, artificial intelligence and robotics – which technology companies were already commercialising – as some of the "undeniable" structural developments that would dramatically change the economy and must be embraced by businesses.
For instance, Morgan Stanley analysts recently described robotic process automation as a “game-changer” that could reduce companies’ spending on projects, leading to an at least $US25 billion “hit” to global business processing outsourcing and IT services markets in the medium term.
Mr Frazis said despite the decline in trust in Australian banks, they played an important role in the nation’s economic prosperity and it was vital that the relationship with the broader community was repaired. He said banks had lost “sincere connections” with real Australians and their situations, such as young couples trying to save a deposit for a house.
“This fractious relationship is likely to impact the nation’s prosperity. It must be fixed,” he said.
“And apologising is not enough. We have to earn our customers’ trust. And the only way to earn trust is through action.”