00:00:00
Speaker 1: Welcome to Fear and Greed Sunday feature, oh Michael Thompson. This week we are heading back into the Fear and Greed vault, all the way back to March of twenty twenty one, when Sean spoke with the boss of Bendigo and Adelaide Bank, Marni Baker. Why because this week Marni Baker announced that she is stepping down after thirty five years with the ASX listed bank. It is a pretty incredible stint and well worth revisiting the time that Marni appeared on the podcast. It was a great insight into the growth of Bendigo and Adelaide Bank. It's remarkable and very long history, where it fits into the sector in Australia and really in a reflection of the time the interview was recorded, the role of the banks in helping the economy during the pandemic. It was recorded as I mentioned back in March of twenty twenty one, I hope you enjoy it.
00:00:53
Speaker 2: As I've said many times now, the banks have played a vital role during the pandemic and the recession. Over the last year. They've acted as a shock absorb with the economy, working with business and homeland customers to help them get through the tough times. It's a reminder of the hugely important position they hold in Australian society. Bendigo and Adelaide Bank is the fifth largest retail bank in the country. Marny Baker is a managing director of the bank. And I'm pleased to say my guest this morning, Marty, welcome to Fear and Greed.
00:01:22
Speaker 3: Thanks Sean, it's a pleasure to be here.
00:01:24
Speaker 2: Marney. Tell us a little bit about Bendigo and Adelaide Bank, particularly for those in the northern parts of the country, in some of the East Coast.
00:01:31
Speaker 3: Yeah, so you touched on it before, Sean. We're the fifth largest retail bank in Australia. We've been around for one hundred and sixty two years, a retail bank, very much focused on our customers and into around five hundred communities right across Australia, bringing both consumer banking, business banking, and of course we have quite a large agri bank also under our umbrella.
00:01:56
Speaker 2: Okay, and how are you mostly South Australian, Victorian and New southwayes Heals based.
00:02:00
Speaker 3: We're a national organization, so represented in every state and territory. Of course, our heritage comes from being a building society back in the gold Rush days in Bendigo, and our head office is in Bendigo itself, So we are the only large bank that actually has its regional headquarters outside of a capital city. And then of course we have offices, like I said, in every other state and territory.
00:02:24
Speaker 2: Okay, the most recent reporting season, Adelaine and Benigo reported your half year was till December thirty one. You had one of the best results of anyone. Now, revenue had jumped, your cost wincomery ratio for banks, all important had fallen significantly. You had a big drop in bad and doubtful debts, much better performance on costs. How do you do that during a pandemic.
00:02:48
Speaker 3: We've been very focused, Sean. So look, we were well placed coming into COVID, well capitalized, a strong, resilient balance sheet and sort of good business performance. But I think something like COVID does give you that impetus to even more focus on the things that actually are important to the organization. And I'd come into this role two and a half years ago and we had just embarked on a strategy that saw us reducing complexity in the organization over one hundred and sixty two years, there had been some complexity that had built up, but also investing in capability just to take that next step change that we were looking for in our organization and probably telling our story a lot better than we perhaps have done to date. And you touched on that earlier when you asked me the question that perhaps some people didn't have a background of who we are. So it was a strategy that we employed. COVID came about and we needed to just revisit that and make sure that it was still solid and sound, and we found that it was with a little bit of resequencing, of course, but we have embarked on a pretty ambitious growth and transformation strategy. That is, as you could see by our results, our most recent results is actually we're very pleased that we're actually getting the outcomes from the focus and the effort that's being put in by the organization.
00:04:07
Speaker 2: Banks always talk about transformation. Bring it down to my level, to my mother's level. What does a bank mean when it's transforming? When you say digital transforming, is it about doing what your customer wants? Like I'm trying to get a really tangible way of understanding what bank transformation means.
00:04:23
Speaker 3: Well, we've always been very much a customer focused organization. Our purpose goes back, like I said, one hundred and sixty two years, and it's about feeding into prosperity and not off it, and that stayed central to who we are over all that time, and at the very center of that is our customers. So we call ourselves a listening organization where we're always talking with our customers understanding what are they needing from our financial institution and what are the behavioral changes that we're seeing, you know, in our customers. So, you know, we've seen quite a lot of that, especially of more recent times, but we've seen that, you know, over the last few decades, especially as things like the Internet's come into play. You know, technology playing an even bigger role now, so you're right around the digitization or digital being a bigger component now of that transformation. But it really also is just understanding, you know, what your customers are looking for from a financial institution, and it's it is as simple as just getting rid of processes that don't make any sense anymore for a customer, making sure that we're streamlining so that when they talk to different parts of the organization. Because if I go back in time, you know, to my early days in banking, it was branches that's where you spoke with customers, but now it can be through a call center, online web chat, still through a branch, even to make sure that the customers not having to repeat themselves when they're you know, they're speaking to someone different in the organization. So it can be as simple as just improving the processes that you do have, removing duplication, you know, where it's just in peeding the customer experience and just making it easier for people to be able to do business with us and for us to be able to serve our customers in the way that we believe and our customers should expect of us.
00:06:10
Speaker 2: So you've mentioned branches there, and for decades there's been a debate about how many branches is the right number of branches. You cut some of your branches in the last twelve months, how important is the bank branch going forward?
00:06:22
Speaker 3: So we run quite a unique model, Sean, in the sense that we have corporate branches like you would traditionally see in other banks and other financial institutions, but we also have what is a very unique community bank model where we have partnered with communities that's now been in place for just over twenty years, where we partner with communities and the communities themselves actually own those branches and operate those branches under our license with our products and the backing of our balance sheet from a credit perspective, etc. But they really take ownership within their local communities and then we share the revenues between the community and ourselves and in the community itself. Those revenues are then decided by the community and go out to build infrastructure, to provide as little as football jumpers on the backs of kids playing football, to building community centers, getting doctors back into their local communities. So it's a very sort of different model and not something that you would see anywhere in the world actually, because we have searched the world to see if there was anything like it, and it is very unique. And in the twenty years, just over twenty years, two hundred and fifty million dollars has been returned back into communities through this community bank network. Like I said, that's gone to just building the sustainability of communities right across Australia.
00:07:47
Speaker 2: So back to the branch comment, is that a reflection of corporate plus community branches. There's good reason for it.
00:07:55
Speaker 3: Yeah, the ones that we have has been in response, So the corporate branches have been in respect. It's just a change in customer needs. You know, less people are coming into the branch to transact and are doing that more online now. So some branches we've reduced the floor of print or the footprint of the branch. Others we have adapted or change and what we're calling branch of the future or the network of the future, where we have adapted it so our local business customers can come in and use that space where they may have an online business and be able to have a shop front in a street front to be able to accelerate the awareness of their businesses. And we've also seen with the community bank branches and some of those which are run by the communities themselves through a board structure, a governance structure, as you would see any company being ran. And they may have had a number of sites and so they may have been in close proximity to each other and it just didn't make sense to have as many in close proximity, and they've brought them together. But it's about adapting. It really is about adapting to the changing needs of customers.
00:08:58
Speaker 2: So one thing I think the banks didn't incredibly will last year. And you know, everyone loves bashing banks, but I don't think the economy would be where it's at today if it wasn't for the banks. Obviously, the big four yourself, sun coorb some of the smaller guys around as well. And the thing that I think was really critical was the ability for the banks to allow customers to freeze their loans and we still have to pay them back. So that's all fair, but the banks could actually withstand the shock better than the individual could withstand the shock, or at least it was shared. So what I'm asking in the mortgage market, how many of your loans were frozen? And then where are you up to now?
00:09:36
Speaker 3: Yeah, I think it's important just to be clear that the loans weren't frozen. We, like the whole banking industry did so it wasn't just the few larger banks, it's the whole banking industry. We got together and made that decision, and that was in conjunction with the government and with regulators to ensure that we're able to do it in a seamless way, but we provided a holiday period so where customers could defer their interest and principal payments on their loans whilst they managed through the uncertainty on their lives or their businesses through the COVID period, So it was a holiday period rather than being frozen. I think it's really representative of how you can come together as an industry, all focused on the outcome of ensuring that Australians were able to get through this period of time because we all didn't know what we're really facing into at that point in time, so it took a concerted effort. But the number of loans that continue to be on deferral arrangements has come down steadily and especially of more recent months, and it's dropped from our peak in our organization in mid twenty twenty was around six point nine billion dollars in value of loans that were on these deferral arrangements and has come down over ninety percent since then to now less than one percent of our total loan book. That says at the thirty first of January, which is the latest update that we've made to the market, and since then, courses come down even further, so we're really please.
00:11:03
Speaker 2: Yes, how do you think the economy is traveling? Because you do get a bit of an insight into what's going on through mortgages and business loans. How do you think the economy is traveling?
00:11:11
Speaker 3: Yeah, Look, we've seen a strong improvement in the economy. I think everyone would say that, and the confidence in the economy, and I think that's a stark change to what we thought we may have been facing into just twelve months ago. You know, we've see business confidence and consumer sentiment up. I think it helps the ongoing low rate environment and the work that the Reserve Bank's done there. We're seeing a growing housing market, improving jobs market with some of the latest data that's out and something that's sort of dear to our organizations hard is that really continued growth in regional Australia and our customers. You know, they've shown remarkable resilience and adaptability during this time. So through this period, what we've seen with business customers and how they've responded and how they've innovated and in some case of created new revenue streams and models has been quite remarkable and it just shows the resilience of the sector. And it gives me personally great confidence and the ability to grow. And like I said before, we also have an agri business as well, so you know, an agri production and exports. They're also bouncing back strongly and new market opportunities emerging.
00:12:20
Speaker 2: What about government support during the pandemic, do you think that was adequate? And they're looking at tweaking changes at the moment to rules around small businesses. We've got responsible lending laws coming up in coming weeks. But do you think generally the government has done a good job in helping businesses and individuals.
00:12:37
Speaker 3: Yeah. Look, I think you've only got to look at Australia when you compare it to what's happening elsewhere in the world. I think it was one of the really positive stories to come out early through COVID was the way that industry, government and regulators all worked together and the stimulus that was put into the system, not only by the government in a fiscal sense, but also what the Reserve Bank did. I think has held us in really good stead through this period when, like I said, none of us knew, you know, necessarily where this was actually going to end, because this was a health crisis, you know, predominantly, and it was the economic impact of that health crisis, and a health crisis that we're still navigating through and we're still managing. So you know, even the recovery of this now needs really careful management. And I know, you know, the government through the more recent budget and of course the one that's coming in May, will be looking to continue to sort of underpin and sort of shore up that economic recovery.
00:13:37
Speaker 2: You are in an incredibly competitive sector and we've seen that Westpac is white labeling deposit products for after pay, the buy now, Pay later group. How can you keep ahead of that competition.
00:13:49
Speaker 3: I think it goes back to what I was saying before Sean around really listening to your customers. You know, it is interesting. I'm a big advocate for the fintech sector, you know, I do like to see where innovation is coming in. You know a lot of these the buy now, Pay Later, a lot of the other FinTechs that are honing in on a certain part of the customer experience and doing it really well and preempting what customers are looking at. And that's where you get great innovation, and that's where it actually lifts the bar, you know, across the whole industry. You know a lot of people are focusing on the buy now, pay later. But you know, if you think about it in the sense of you know, ATMs and then you know FPOs changed the way that they access cash. So this is happening all the time, this sort of evolution, and now you're seeing a buy now, pay later that's stepping into probably the credit card market there, and you'll continue to see more innovation and evolution, I'm sure as we move forward. And it's something too I think to watch really closely. Marny, thanks for talking to Fearing Greed Pleasure Sean lovely to meet you. That was Marti Baker, Managing director of the Bendigo and Adelaide Bank Group.
00:15:01
Speaker 2: F
Speaker 1: Welcome to Fear and Greed Sunday feature, oh Michael Thompson. This week we are heading back into the Fear and Greed vault, all the way back to March of twenty twenty one, when Sean spoke with the boss of Bendigo and Adelaide Bank, Marni Baker. Why because this week Marni Baker announced that she is stepping down after thirty five years with the ASX listed bank. It is a pretty incredible stint and well worth revisiting the time that Marni appeared on the podcast. It was a great insight into the growth of Bendigo and Adelaide Bank. It's remarkable and very long history, where it fits into the sector in Australia and really in a reflection of the time the interview was recorded, the role of the banks in helping the economy during the pandemic. It was recorded as I mentioned back in March of twenty twenty one, I hope you enjoy it.
00:00:53
Speaker 2: As I've said many times now, the banks have played a vital role during the pandemic and the recession. Over the last year. They've acted as a shock absorb with the economy, working with business and homeland customers to help them get through the tough times. It's a reminder of the hugely important position they hold in Australian society. Bendigo and Adelaide Bank is the fifth largest retail bank in the country. Marny Baker is a managing director of the bank. And I'm pleased to say my guest this morning, Marty, welcome to Fear and Greed.
00:01:22
Speaker 3: Thanks Sean, it's a pleasure to be here.
00:01:24
Speaker 2: Marney. Tell us a little bit about Bendigo and Adelaide Bank, particularly for those in the northern parts of the country, in some of the East Coast.
00:01:31
Speaker 3: Yeah, so you touched on it before, Sean. We're the fifth largest retail bank in Australia. We've been around for one hundred and sixty two years, a retail bank, very much focused on our customers and into around five hundred communities right across Australia, bringing both consumer banking, business banking, and of course we have quite a large agri bank also under our umbrella.
00:01:56
Speaker 2: Okay, and how are you mostly South Australian, Victorian and New southwayes Heals based.
00:02:00
Speaker 3: We're a national organization, so represented in every state and territory. Of course, our heritage comes from being a building society back in the gold Rush days in Bendigo, and our head office is in Bendigo itself, So we are the only large bank that actually has its regional headquarters outside of a capital city. And then of course we have offices, like I said, in every other state and territory.
00:02:24
Speaker 2: Okay, the most recent reporting season, Adelaine and Benigo reported your half year was till December thirty one. You had one of the best results of anyone. Now, revenue had jumped, your cost wincomery ratio for banks, all important had fallen significantly. You had a big drop in bad and doubtful debts, much better performance on costs. How do you do that during a pandemic.
00:02:48
Speaker 3: We've been very focused, Sean. So look, we were well placed coming into COVID, well capitalized, a strong, resilient balance sheet and sort of good business performance. But I think something like COVID does give you that impetus to even more focus on the things that actually are important to the organization. And I'd come into this role two and a half years ago and we had just embarked on a strategy that saw us reducing complexity in the organization over one hundred and sixty two years, there had been some complexity that had built up, but also investing in capability just to take that next step change that we were looking for in our organization and probably telling our story a lot better than we perhaps have done to date. And you touched on that earlier when you asked me the question that perhaps some people didn't have a background of who we are. So it was a strategy that we employed. COVID came about and we needed to just revisit that and make sure that it was still solid and sound, and we found that it was with a little bit of resequencing, of course, but we have embarked on a pretty ambitious growth and transformation strategy. That is, as you could see by our results, our most recent results is actually we're very pleased that we're actually getting the outcomes from the focus and the effort that's being put in by the organization.
00:04:07
Speaker 2: Banks always talk about transformation. Bring it down to my level, to my mother's level. What does a bank mean when it's transforming? When you say digital transforming, is it about doing what your customer wants? Like I'm trying to get a really tangible way of understanding what bank transformation means.
00:04:23
Speaker 3: Well, we've always been very much a customer focused organization. Our purpose goes back, like I said, one hundred and sixty two years, and it's about feeding into prosperity and not off it, and that stayed central to who we are over all that time, and at the very center of that is our customers. So we call ourselves a listening organization where we're always talking with our customers understanding what are they needing from our financial institution and what are the behavioral changes that we're seeing, you know, in our customers. So, you know, we've seen quite a lot of that, especially of more recent times, but we've seen that, you know, over the last few decades, especially as things like the Internet's come into play. You know, technology playing an even bigger role now, so you're right around the digitization or digital being a bigger component now of that transformation. But it really also is just understanding, you know, what your customers are looking for from a financial institution, and it's it is as simple as just getting rid of processes that don't make any sense anymore for a customer, making sure that we're streamlining so that when they talk to different parts of the organization. Because if I go back in time, you know, to my early days in banking, it was branches that's where you spoke with customers, but now it can be through a call center, online web chat, still through a branch, even to make sure that the customers not having to repeat themselves when they're you know, they're speaking to someone different in the organization. So it can be as simple as just improving the processes that you do have, removing duplication, you know, where it's just in peeding the customer experience and just making it easier for people to be able to do business with us and for us to be able to serve our customers in the way that we believe and our customers should expect of us.
00:06:10
Speaker 2: So you've mentioned branches there, and for decades there's been a debate about how many branches is the right number of branches. You cut some of your branches in the last twelve months, how important is the bank branch going forward?
00:06:22
Speaker 3: So we run quite a unique model, Sean, in the sense that we have corporate branches like you would traditionally see in other banks and other financial institutions, but we also have what is a very unique community bank model where we have partnered with communities that's now been in place for just over twenty years, where we partner with communities and the communities themselves actually own those branches and operate those branches under our license with our products and the backing of our balance sheet from a credit perspective, etc. But they really take ownership within their local communities and then we share the revenues between the community and ourselves and in the community itself. Those revenues are then decided by the community and go out to build infrastructure, to provide as little as football jumpers on the backs of kids playing football, to building community centers, getting doctors back into their local communities. So it's a very sort of different model and not something that you would see anywhere in the world actually, because we have searched the world to see if there was anything like it, and it is very unique. And in the twenty years, just over twenty years, two hundred and fifty million dollars has been returned back into communities through this community bank network. Like I said, that's gone to just building the sustainability of communities right across Australia.
00:07:47
Speaker 2: So back to the branch comment, is that a reflection of corporate plus community branches. There's good reason for it.
00:07:55
Speaker 3: Yeah, the ones that we have has been in response, So the corporate branches have been in respect. It's just a change in customer needs. You know, less people are coming into the branch to transact and are doing that more online now. So some branches we've reduced the floor of print or the footprint of the branch. Others we have adapted or change and what we're calling branch of the future or the network of the future, where we have adapted it so our local business customers can come in and use that space where they may have an online business and be able to have a shop front in a street front to be able to accelerate the awareness of their businesses. And we've also seen with the community bank branches and some of those which are run by the communities themselves through a board structure, a governance structure, as you would see any company being ran. And they may have had a number of sites and so they may have been in close proximity to each other and it just didn't make sense to have as many in close proximity, and they've brought them together. But it's about adapting. It really is about adapting to the changing needs of customers.
00:08:58
Speaker 2: So one thing I think the banks didn't incredibly will last year. And you know, everyone loves bashing banks, but I don't think the economy would be where it's at today if it wasn't for the banks. Obviously, the big four yourself, sun coorb some of the smaller guys around as well. And the thing that I think was really critical was the ability for the banks to allow customers to freeze their loans and we still have to pay them back. So that's all fair, but the banks could actually withstand the shock better than the individual could withstand the shock, or at least it was shared. So what I'm asking in the mortgage market, how many of your loans were frozen? And then where are you up to now?
00:09:36
Speaker 3: Yeah, I think it's important just to be clear that the loans weren't frozen. We, like the whole banking industry did so it wasn't just the few larger banks, it's the whole banking industry. We got together and made that decision, and that was in conjunction with the government and with regulators to ensure that we're able to do it in a seamless way, but we provided a holiday period so where customers could defer their interest and principal payments on their loans whilst they managed through the uncertainty on their lives or their businesses through the COVID period, So it was a holiday period rather than being frozen. I think it's really representative of how you can come together as an industry, all focused on the outcome of ensuring that Australians were able to get through this period of time because we all didn't know what we're really facing into at that point in time, so it took a concerted effort. But the number of loans that continue to be on deferral arrangements has come down steadily and especially of more recent months, and it's dropped from our peak in our organization in mid twenty twenty was around six point nine billion dollars in value of loans that were on these deferral arrangements and has come down over ninety percent since then to now less than one percent of our total loan book. That says at the thirty first of January, which is the latest update that we've made to the market, and since then, courses come down even further, so we're really please.
00:11:03
Speaker 2: Yes, how do you think the economy is traveling? Because you do get a bit of an insight into what's going on through mortgages and business loans. How do you think the economy is traveling?
00:11:11
Speaker 3: Yeah, Look, we've seen a strong improvement in the economy. I think everyone would say that, and the confidence in the economy, and I think that's a stark change to what we thought we may have been facing into just twelve months ago. You know, we've see business confidence and consumer sentiment up. I think it helps the ongoing low rate environment and the work that the Reserve Bank's done there. We're seeing a growing housing market, improving jobs market with some of the latest data that's out and something that's sort of dear to our organizations hard is that really continued growth in regional Australia and our customers. You know, they've shown remarkable resilience and adaptability during this time. So through this period, what we've seen with business customers and how they've responded and how they've innovated and in some case of created new revenue streams and models has been quite remarkable and it just shows the resilience of the sector. And it gives me personally great confidence and the ability to grow. And like I said before, we also have an agri business as well, so you know, an agri production and exports. They're also bouncing back strongly and new market opportunities emerging.
00:12:20
Speaker 2: What about government support during the pandemic, do you think that was adequate? And they're looking at tweaking changes at the moment to rules around small businesses. We've got responsible lending laws coming up in coming weeks. But do you think generally the government has done a good job in helping businesses and individuals.
00:12:37
Speaker 3: Yeah. Look, I think you've only got to look at Australia when you compare it to what's happening elsewhere in the world. I think it was one of the really positive stories to come out early through COVID was the way that industry, government and regulators all worked together and the stimulus that was put into the system, not only by the government in a fiscal sense, but also what the Reserve Bank did. I think has held us in really good stead through this period when, like I said, none of us knew, you know, necessarily where this was actually going to end, because this was a health crisis, you know, predominantly, and it was the economic impact of that health crisis, and a health crisis that we're still navigating through and we're still managing. So you know, even the recovery of this now needs really careful management. And I know, you know, the government through the more recent budget and of course the one that's coming in May, will be looking to continue to sort of underpin and sort of shore up that economic recovery.
00:13:37
Speaker 2: You are in an incredibly competitive sector and we've seen that Westpac is white labeling deposit products for after pay, the buy now, Pay later group. How can you keep ahead of that competition.
00:13:49
Speaker 3: I think it goes back to what I was saying before Sean around really listening to your customers. You know, it is interesting. I'm a big advocate for the fintech sector, you know, I do like to see where innovation is coming in. You know a lot of these the buy now, Pay Later, a lot of the other FinTechs that are honing in on a certain part of the customer experience and doing it really well and preempting what customers are looking at. And that's where you get great innovation, and that's where it actually lifts the bar, you know, across the whole industry. You know a lot of people are focusing on the buy now, pay later. But you know, if you think about it in the sense of you know, ATMs and then you know FPOs changed the way that they access cash. So this is happening all the time, this sort of evolution, and now you're seeing a buy now, pay later that's stepping into probably the credit card market there, and you'll continue to see more innovation and evolution, I'm sure as we move forward. And it's something too I think to watch really closely. Marny, thanks for talking to Fearing Greed Pleasure Sean lovely to meet you. That was Marti Baker, Managing director of the Bendigo and Adelaide Bank Group.
00:15:01
Speaker 2: F
