Matt Comyn’s vision is for leaner, stronger CBA

New CBA chief Matt Comyn reckons it’s the toughest time he’s seen in banking for at least five years.

Commonwealth Bank CEO Matt Comyn. Picture: James Croucher.

Commonwealth Bank chief executive Matt Comyn reckons it’s the toughest time he’s seen in banking for at least five years.

It’s a telling assessment, because it takes no account of the financial services royal commission, the prudential regulator’s damning report on CBA’s culture and governance, the $700 million ­penalty for money-laundering breaches, a near-complete clean-out of the bank’s leadership team, and the settlement with ASIC over manipulation of the bank bill swap rate.

Comyn has no option but to recognise the bank’s self-inflicted wounds, while giving shareholders and customers some hope that CBA at some stage will be in a position to leave it all behind.

“We’ve had a difficult year but we’re focused on fixing the issues,” he says. “There has been good progress, and while there is still a lot to do, I know we will be a stronger institution as a result.”

Comyn’s brutal opening assessment is confined to the operating environment alone — the slowing growth in home lending that feeds CBA’s retail-banking engine room, and the elusive recovery in business credit.

CBA is also a late arrival at the “simpler and better banking” party, with its three major bank domestic rivals picking up the vibe years ago.

The CBA chief is unfazed.

“The difference for us is that we have the strongest retail franchise in a domestic context,” he tells The Australian in an interview.

“We do feel there is substantial potential left in the core business; it’s where our relative competitive advantage is for us.

“Credit growth will be subdued, particularly compared to the last five years, but long term we remain very optimistic about the economic prospects of Australia.”

Comyn recognises that CBA’s domestic rivals are traversing the same territory.

But for him, more intense competition is a recipe for better customer outcomes.

While he overlooks the resulting pressure on margins, which appeared in CBA’s June half-year, any banker would be taking leave of their senses in the current environment if they were to protest about leaching profitability.

As much as CBA starts from a position of undoubted strength as the country’s most powerful retail bank, consolidation of its leadership will require innovation and significant investment in the bank’s digital capabilities. The competing demand for spending on risk and compliance is intense.

Comyn says 80 per cent of customers are regularly using the bank’s digital applications, which unlike old-school banking have strong net promoter scores.

CBA refreshes 27 billion data points daily, and has 5.1 million mobile-app log-ins per day. Digital transactions comprise 59 per cent of total transactions by value, up from 56 per cent a year ago.

The numbers are all heading in the right direction, but Comyn recognises only 38 per cent of the group’s investment spend last year was on productivity and growth, with risk and compliance absorbing 50 per cent. In 2019, risk and compliance will remain above 50 per cent.

“We think it’s appropriate given the context, but we would like to see that shift over time,” the CEO says.

Despite the battering it has taken, the franchise remains relatively strong.

Since his elevation in April, Comyn has spent much time meeting and listening to customers and staff.

“I fully understand how much work is ahead of us to earn their trust,” he says.

“We worked hard to resolve the major regulatory issues we have faced with ASIC and Austrac, including continuing our major investment in financial crime compliance, to ensure we protect the integrity of the financial system, and we have a plan to address the findings of the prudential inquiry which APRA has endorsed.”