The Kiwi CEO has one message for anyone wanting to muscle in on NAB's business customers. "I'm a very competitive person".
How do you define good leadership?
If your team is successful, you’ll be successful. You don’t do it despite them – you do it with them.
You joined NAB as CEO in December 2019 and promptly had to deal with bushfires and COVID-19. How do you think your leadership has been tested during this period?
Well, 2020 was probably one of the most difficult years of leadership for any CEO in Australia. There was something like 900,000 jobs lost in two months. If you go back to the Global Financial Crisis, I think the biggest month of loss was 70,000. So I don’t think anybody had seen anything of that magnitude before and to lead through it, you do rely on your team – you rely on bringing people in to work through solutions in a rapid time. We went from 4000 colleagues being able to work remotely to 30,000 within two weeks. It was just amazing. We’ve also seen the real devastation of some businesses that just couldn’t make the transition because of pace while others have pivoted and done incredibly well.
NAB is Australia’s biggest business bank. How are you working with SMEs to navigate through the new normal?
When COVID-19 struck, we asked all of our bankers to focus on existing customers, not new customers. Our bankers talked to customers by the thousands per week. It was a strategy that’s really paid off for us. It’s built solid relationships with those customers. We had something like $60 billion of loans deferred, both business and personal loans, which is a huge amount of money. And as we’re coming out of lockdown, these businesses are getting going again. We’ve now got well over 90 per cent of the loans that we deferred back paying. And jobs are back and being re-created in a lot of industries.
But you’re quite pragmatic about the fact there are some businesses that will have to shut shop after this, aren’t you?
To procrastinate and hope [problems are] going to go away often isn’t the best for a customer, be it an individual or a business. So we’ve been working with customers to find them the best solution. If the business isn’t going to get up, close it down while you’ve still got equity in the business and restart. I saw this experience in the United Kingdom, where many banks left it too long and didn’t have those conversations with customers. By the time they got to it, they couldn’t help.
It must be heartbreaking. You’ve toured the country, you’ve heard the stories. How does it affect you personally?
My heart goes out to those business owners because when you start a business you’ve put your heart and soul and family into that business to get it going. To have that not work is crushing for people. We’ve been very careful with how we’ve worked with customers to see if we can’t get them into a good position at the end [of COVID-19] so that they can start again. We’re now working with that four or five per cent [of businesses struggling to pay back their loans] to see what position we can get them into. The other side to that, of course, is our bankers are having to have tough conversations for months and months and months and that brings stress and strain on our colleagues here at work, too.
You talk a lot about customers and how they must come first. Is the customer more powerful than ever?
Australian banking has learnt a lot over the past couple of years. It all culminated in the royal commission, which showed many practices across a wide range of the financial service industry that we weren’t happy with… We lost sight of the fact that we exist only because of our customers. So I think there’s been a reset and a better balance now between the real interests of customers and of shareholder returns. You’d have thought that they would always have been considered together but I think we as an industry probably pushed the balance much more towards return to shareholders than looking after customers.
COVID-19 has been crippling and yet, as with all crises, there have been opportunities. What do you think the greatest opportunities for NAB have been?
We had a 94-year-old gentleman who wrote to us and said he’d like to thank us for teaching him how to use his mobile phone to bank on. He’d been in the Second World War, had served in the Australian Air Force and COVID-19 wasn’t going to challenge him! So please don’t tell me age is a barrier to technology and change. I think we’re changing quite dramatically for the better using technology and now we’re giving greater flexibility to our colleagues to work two or three days from home. I do want them in the office for a couple of days to really build camaraderie, though. When you sit in a room together throwing ideas around, I don’t think that can be replaced by a Zoom screen. It’s a combination of the two that will be incredibly powerful.
Do you envisage a three-two-day split or will you be looser than that?
The only piece that I’ll be a bit prescriptive about is that we do need the balance – it can’t all be from home and it doesn’t all need to be working in a building like this anymore.
Is there a new wave of entrepreneurialism at NAB now? You’ve just invested $220 million in buying neobank 86 400 but I’m also hearing from some businesses that there’s a bit of fatigue and complacency.
Over the past four or five years, the bank has spent a lot of money on technology. We probably wouldn’t have had the good experience we did of keeping the bank going through COVID-19 if we hadn’t spent that money. However, I think we do need to be much more innovative on behalf of our customers at making business with us easier to do. We’ve always had great ideas but we need to execute them. This is a very fast-moving industry and to be a really great player, you need to execute at pace.
Can you do that with 31,000 staff? Bureaucracy is what it is, right?
My view is you can. We’ve streamlined the business down through a number of sales in areas that we just didn’t think we should be in anymore – one of them being MLC; that business has been sold but is yet to transact. We want to get back to a good core business that we can innovate from the base of. When I first came in here, the bank had something like 460 projects on the go and I thought we were trying to do too much. By doing too much, we weren’t focusing enough on the areas that we could be the best at so we brought it down to 19 programs. Those 19 programs get fully funded, they get the best of our people and they get the focus from the executive team. What we’ve seen – even in the past six months – is that the programs are starting to all run on green or amber and next to nothing is on a red, where before half the program was running on red and amber. Doing less, resourcing it well and putting the best of our colleagues into it, with good consistency, is certainly having a positive impact for us.
CBA has been quite aggressive in wanting to take your mantle as Australia’s biggest business bank. Are you a competitive person?
Yes, I’m a very competitive person but for me it’s executing against a strategy. We’re not going to rush around telling people what we’re up to – let’s deliver. There’s plenty of space in this marketplace for several very good banks and I’m pretty confident we’ll remain Australia’s biggest and best business bank for a very, very long time. I love competition – it makes it better for customers and we welcome it – but don’t get distracted. There’s a lot of noise in the marketplace and people can chase after shiny things.
What would you say is your absolute strength as a leader?
It’s around getting teams of people to do a very good job [and reinforcing] that they’re better off operating as a team than as individuals. I like to enjoy myself at work; I like to create an environment where people can have some fun and deliver well and that’s what we’re endeavouring to do here. We’re already starting to see the results coming through from our colleague engagement scores and our leadership scores are well up on 12 months ago. They were some of the worst I’d seen for quite some time when I joined.
And what would you say is your biggest gap as a leader?
It comes around to people [and moving them on]. There are times when you hold on and hold on for too long. You think you can get some change and it doesn’t come through as you like or as you would have expected and for the individual’s sake, and your own sake sometimes, you should have moved a bit earlier. That would be one of my greatest faults. I haven’t made all of the right calls through COVID-19. When I saw 900,000 people lose their jobs I wasn’t too sure that we should be pushing really hard into home lending and we backed off a bit, which meant two of the other banks tore right into that space. They may or may not be wrong – you won’t know for three to five years – but we lost some market share. When you make a mistake, you’ve got to learn how to quickly turn it around, change a decision and move on.
A long time ago you said that you didn’t like change. Have you learnt to love it?
I’m a human being like everybody – we like the path we take and the things we do. I enjoy leading change but sometimes I’m a little bit of a lag on picking it up. That’s why it’s great having adult children who keep saying, “It’s not done that way anymore”, and keeping me absolutely real, as well as a wife who’s far more technologically advanced than her husband. So I’m constantly getting lessons on change from my wife and two daughters, which is probably good for me.
Presumably you surround yourself with people who know a lot about that as well?
I enjoy being with people who are thinking about what needs to happen in a business. Earlier this afternoon I was upstairs with our strategy team – I popped into a meeting and ended up staying for an hour. I find that invigorating. The boss can throw a few questions in but it was wonderful to see people unintimidated by their boss walking into the room and being free to keep the conversation going on the topic they were on. That’s a big part of what I want in this organisation – that my staff can, in a constructive way, challenge what’s going on to make it better, rather than accept that what we’ve got is what we’ve got.
You spent seven years turning the Royal Bank of Scotland around. Does being CEO sometimes feel like an endurance test?
It is an endurance test. These are long-term, not short-term, jobs and you’ve got to make sure that you and your colleagues are there for the long term with a very clear plan in mind. You’ve got to be able to duck and weave as things come at you but also stay on course all the time. In the UK, I probably had one of the toughest jobs in banking globally. You learn to build your own resilience but you do have to look after yourself. I enjoy getting out cycling with my wife and a small group of friends. I enjoy going home and spending time with my wife – we’ve got an amazing relationship, which I think really helps when you’re running these jobs, so you can switch off into a different mindset. But you know, one day I’ll go and do something else. This job is not about me; it’s got to be about the organisation. Some leaders get caught in the trap that it’s about them. It’s not. You have some fantastic days in the job and you have some pretty terrible days in the job. As long as you’re having more good days than bad days, I think you’re on the right side of it.
Do you ever get emotional at work?
Probably more excited than emotional. If things are going badly from a customer perspective – and remember, I see a lot of complaints, particularly through COVID-19 – I can get pretty excited, especially if people in the organisation haven’t followed up on phone calls or got back to customers with responses. It’s those sorts of things, more than anything else, that get me very excited.
When you say excited, you mean hot under the collar?
Yes. If you say you’re going to do something, my expectation is you’ll do it. Part of our value set here at the bank is “own it”. If we’ve promised to do something, we should get on and deliver it. It’s been ingrained in me for 40 years.
What would be the one piece of advice you’d give a brand-new CEO?
Spend the first three or four months walking around your business, talking to colleagues and talking to customers. That will give you the greatest insights into what you need to do over the medium to long term. During my first three months here I spent a lot of time out with our business bankers – it’s the heart of our business – our retail bankers and our customers. My best days are out with our bankers understanding what we’re delivering and what we’re not. I think the boss needs to know what’s going on with their business at a pretty good level.
Illustration by Marc Némorin.