NAB integration of 86 400 buy spurs staff exits, culture clash

About 50 people including senior managers have left the digital bank following the NAB takeover, amid a talent war and possible culture clash.

Philippa Watson, Ubank CEO, is leading the integration of NAB’s 86 400 acquisition.

National Australia Bank has lost a large proportion of 86 400’s staff after completing a $220m takeover of the digital bank, with about 50 people departing and some citing a culture clash.

The exit of 86 400 staff has continued thick and fast in 2022 after the transaction was completed in May last year. Sources told The Australian many of the departures were linked to stark differences in the cultures of a start-up bank and a large incumbent.

“It’s a very different culture at NAB,” one person said on the basis of anonymity.

Almost 140 employees went across to NAB via the 86 400 acquisition, meaning the largely voluntary exits represent more than 35 per cent of the intake.

86 400 boss Robert Bell, whose departure was flagged by NAB, left after the planned transfer of 86 400’s banking business onto the acquirer’s licence.

Sources said 86 400 chief risk officer Guy Harding was also understood to be leaving, while head of lending Melissa Christy exited last month to join AMP in a similar role.

86 400’s product and marketing chief Travis Tyler has departed NAB and joined ASX-listed Zip, while financial planning and analysis manager Harman Shankar left to join MA Financial. 86 400’s engineering manager Andrew Ritchie exited NAB last month to join open banking platform Basiq.

The competition regulator approved NAB’s $220m takeover of 86 400 almost a year ago and the deal completed in May.

The purchase price reflected the 81.7 per cent of the digital bank that NAB didn’t already own and included transaction costs. The major bank is integrating 86 400 into its digital arm UBank, drawing on the former’s technology platform but doing away with the start-up’s brand.

UBank – which has been plugging the employee gaps at 86 400 and growing the combined team – plans to refresh its own brand in the first half of the calendar year.

A UBank spokeswoman said both it and 86 400 were “on trajectories of growth”.

“We are pleased with the progress we have made bringing them together and growing our team to support customers.

“We have grown the 86 400 workforce by approximately 70 per cent, and are welcoming dozens of fantastic new team members each month.

“Most of these joiners are in new roles and some are replacing colleagues who are moving to new opportunities. Staff change remains broadly consistent with previous years and industry experience. We are on track to deliver a refreshed UBank.”

UBank chief Philippa Watson also took the reins as head of 86 400 in October, with the start-up’s management team reporting to her.

Many of the 86 400 exits after the deal saw employees decamp to other jobs, amid a war for talent linked to the impact of the pandemic.

Regal Funds Management’s Mark Nathan highlighted risks in the integration of start-up players into large banks.

“Big bank compliance and operating frameworks are geared to minimise risk, although the many checks and balances often stifle innovation,” he said.

“There is always the risk that a small innovative company loses its edge in the bowels of a larger institution.

“If they (NAB) get the benefit, not just for UBank, but if the systems are scalable to simplify some of the NAB systems as well, they will more than pay for themselves.”

When 86 400 was getting off the ground in 2018 it had ambitions to become a scale player with its then chairman saying the major banks had “lost sight” of what customers want.

Banking analysts will be closely monitoring NAB’s integration efforts on 86 400, particularly because the bank last year also acquired Citigroup’s local retail business in a $1.2bn transaction.

NAB isn’t the only player to snap up a digital bank rather than build its own in the year.

Bendigo and Adelaide Bank in August agreed to buy 100 per cent of Ferocia, which operates digital bank Up, for up to $116m in the former’s shares.

When the deal was announced last year, Bendigo Bank said the Up brand would remain in place and the digital mobile bank would be run by “the same people, with the same customer proposition”.

This week, the bank’s CEO Marnie Baker said the purchase of Up “lays the groundwork for future growth”, but admitted higher staff costs associated with the acquisition. Bendigo Bank sees the purchase as a way to accelerate its digital strategy.

“Up has 460,000 customers – many of whom are logging onto the app several times a day. We can see that 45,000 of these customers are actively saving for a deposit on a home and we plan to service these savvy, younger customers with our fully digital offering Up Home later this financial year,” Ms Baker said.