CBA CEO Matt Comyn takes swing at ‘free-riding’ tech giants

Commonwealth Bank boss Matt Comyn has come out swinging against the technology giants, saying they required further regulation and labelling them ‘free riders’.

CBA CEO Matt Comyn spoke at the ASIC annual forum on Thursday. Picture: Jane Dempster

Commonwealth Bank chief executive Matt Comyn has come out swinging against technology giants, including Apple, saying they required further regulation, as he labelled them “free riders” and warned big banks were cross-subsidising payments infrastructure.

Mr Comyn, speaking on the sidelines of the Australian Securities and Investments Commission’s annual forum, doubled down on his stinging criticism of the technology behemoths, many of whom he said weren’t paying their share of tax here, or shouldering any cost for payments infrastructure.

“There are quite rightly very clear obligations on Australian companies who operate here, I would say they are very unequally applied to some of the international companies,” he said.

“Last time I looked, something like an Apple was probably paying tax in this country of something like 1 per cent of its revenue. It would be low single digit in terms of the tax rate and we pay the full 30 per cent … I think that’s something that would need to be looked at.”

Mr Comyn said besides the banking industry media companies were also suffering as a result of the under-regulation of large global technology companies.

“Take the media industry, I don’t think Australia is a better place if there is not a viable commercial model for media. Now do I think that there needs to be a way for that contribution from those companies to be realised? Yes I do.”

Mr Comyn didn’t rule out the idea of the federal government imposing a levy on technology groups, in a similar way to the annual charge that is imposed on the nation’s biggest banks.

His comments come as a sweeping overhaul of the Payments System (Regulation) Act from 1998 is held up in parliament, spurring frustration among some in the industry.

Asked if Apple required further regulation in Australia, Mr Comyn said: “Unequivocally yes.

“They facilitate lots of competition as long as no one can ever compete with them.”

Mr Comyn also suggested the Australian Competition & Consumer Commission assesses a proposed regime by Apple to allow third-party contactless payments through Apple phones, outside the tech giant’s own network.

“Perhaps the chair of the ACCC could ask for it, if it would be of interest,” he said, noting he could not provide details of Apple’s proposal.

Commonwealth Bank CEO Matt Comyn: ‘Last time I looked, something like an Apple was probably paying tax in this country of something like 1 per cent of its revenue.’ Picture: Brett Hartwig

The technology group buckled to regulatory pressure in August by the European Union to free up access to payments through its phones.

Mr Comyn provided an example that CBA processed almost 5.5 million disputed transactions a year, with about 550,000 of those stemming from Apple, more than double any other source.

“We have dual benefit of having the cost associated with that whilst we pay them a share of the revenue,” he said.

Mr Comyn argued the largest banks in Australia were shouldering too much of the cost of payments infrastructure and maintaining physical branches, essentially cross-subsidising other players.

“If you think about cross-subsidies, there are lots of free riders in industries and cross-subsidies have never been larger. This is not limited to banking,” he said.

“The weight of both the obligation and expectation is felt on a smaller and smaller group of financial institutions, which at some point it’s unprofitable but unless there is some form of commercial economic model over that period of time … if there isn’t I can guarantee you that services will degrade in those areas.”

Mr Comyn didn’t provide specific details, however, about what that economic model could look like.

“Free riders at a smaller scale are not problematic in the same way that free riders (are) at a large scale, and a number of the tech companies are good examples of that. … when you are debating some of the further balance that needs to be struck it’s up to others to determine what that should be.

“Nothing will see a product be regulated faster than the Commonwealth Bank providing it.”

Mr Comyn’s latest comments follow him last year stressing the urgency for a licencing regime for large technology players in Australia, as he also called for a bolstering of consumer protections.

On Thursday, Mr Comyn cited research showing while the average wealth of a CBA customer was $450,000, the lowest of its peers, the equivalent level at Macquarie Bank was more than double that amount. While Macquarie doesn’t operate branches and runs a digital-only model, CBA has the biggest branch network of the big banks.

Mr Comyn noted CBA had committed to maintaining the size of its network in regional Australia until at least the end of 2026, but commercially that was a difficult proposition and customer preferences had “changed dramatically” to favour digital channels.

He also said that more than 95 per cent of people stayed with their respective bank even if their branch closed.

“It’s (branch presence versus commercial viability) obviously something that we grapple with,” Mr Comyn said, adding there would always be a requirement for some physical banking services.

Consumer Action Law Centre CEO Stephanie Tonkin told the ASIC forum she believed vulnerable sections of the community were suffering from a decline in physical banking services. She also said she was concerned the cost of living crisis was “on steroids’, given the ballooning number of calls to the national debt helpline.

Ms Tonkin noted that part of the issue was that consumers were increasingly accessing buy now, pay later services for everyday purchases.

“It is literally being used to afford essentials.”