Why customer-centricity matters in an uncertain banking environment

Deloitte has proudly sponsored the AFR’s Banking Summit since 2016. In his welcome to attendees, David Myers, the firm’s national banking and capital market sector leader made five reflections on the banking sector as a volatile year unfolds.

Australia’s banking sector is a vital and resilient part of our economy and the AFR Banking Summit is an opportunity to connect, learn and collaborate on the challenges and opportunities facing Australia – and for banks to shape what role they will play. With a volatile year ahead, it’s more important than ever to use this Summit to have new conversations and debates, share insights and best practice and find innovative ways to protect and stimulate the economy.  

Here are five seeds for thoughts:

Firstly, the uncertainty continues – Recent events have shown us that we’re facing into a very challenging global and local environment. The recent collapse of the Silicon Valley Bank and demise of Credit Suisse highlight how sensitive our banking eco-system is. 

To stay resilient, banks will need to ensure they have the right capital and balanced investments to withstand these uncertain times. A healthy balance sheet will also inspire consumer confidence.

Secondly, Let’s take a quick look at Australians’ quality of life – In his regular economic outlook David Rumbens, one of Deloitte’s senior macro economists, recently touched on the wicked combination of high inflation, rising interest rates, falling house prices, low levels of consumer confidence and negative real wage growth. 

Individuals, small and medium-sized enterprises (SMEs), and large businesses are all affected by this environment. We need to work hard across the sector so that economic growth remains steady during these uncertain times.

Thirdly, there is the matter of trust – Or general lack thereof. We need to do a better job of protecting consumers from themselves and reminding corporates why organisational trust is so crucial. 

In research conducted by YouGov on consumer attitudes towards banks across Asia Pacific, trust in traditional Australian banks (with a shopfront) was at only 40%, with trust in digital-only Australian banks as low as 27%. Gen Z consumers are a bit more forgiving on both fronts, but these indicators and preferences should inform the sector’s future and where to focus on protecting existing or rebuilding lost trust. 

Again, as a sector, we need to ensure we are offering responsible lending solutions and work with the regulator to make sure we are constantly building trust through openly communicating the pros and cons of different banking tools.

Fourthly, let’s not forget about the ‘decarbonisation train’ – which has well and truly left the station! All of us want to make an impact today for future generations. It’s informing everyday choices, what consumers save for, who they buy from, how and who they bank with. The same applies to SMEs and corporates, who they do business with and how they take steps to net zero. 

Customers want to know that their preferred brands – and their associated supply chains – are accelerating towards a lower carbon footprint. Banks can play a role to engage, inspire and support their customers on this journey.

Finally, we need to modernise where it counts – Customers want reliable, consistent, and secure banking solutions. We have a lot to learn from other sectors, and from overseas. 

One trend we see is that the businesses that find the optimal balance between controlling costs and finding efficiencies (beyond the quick win of responding to changing interest rates); and businesses that invest in new technology and innovation, are the most resilient. And therefore, the most competitive. I have no doubt that taking a customer-centric approach to innovation and digitisation will be the seeds for future growth in the industry. 

The banking sector has a lot to think about. Uncertainty, volatility, and fragility might well characterise our entry into 2023. But if we play our cards right with a common purpose to create value and prosperity for all Australians, the sector will boost its resilience and continue to underpin the economy’s foundations.