Plug into tech investment or it’s over: CBA

CBA executive manager Clive van Horen has warned that banks cannot ‘stand still’ on technology investment.

Commonwealth Bank executive manager Clive van Horen. Picture: Renee Nowytarger

Commonwealth Bank executive manager Clive van Horen has warned that banks cannot “stand still” on technology investment, even as the immediate focus intensified on credit supply to business and more regulation after the Hayne royal commission.

He said CBA’s view from the board down was that technology investment had to remain a constant, despite the other challenges facing the banks.

“The world is moving really fast, whether it’s small tech or big tech — with big tech being the Amazons and Apples and Googles of the world who have enormous resources,” said Mr van Horen during the AltFi Australasia conference.

“We stand still at our peril as an organisation and if we are not continuing to focus on customer-led innovation, we won’t be around in years to come.”

Mr van Horen, who runs CBA’s business customer solutions arm, said that while partnerships with tech groups and burgeoning fintech companies were a “fraught question” for many banks, in his view they were the “only way” forward.

CBA has partnerships with other banks on the Beem It ­instant payments app and cloud accounting provider Xero for data feeds, but ended a referral deal with online small business lender OnDeck.

Mr van Horen said investment in risk management and compliance could be done in tandem following the sector’s scrutiny by the royal commission.

He appeared at the royal commission last year and was grilled on CBA’s overcharging of business overdraft customers and the bank’s delayed response to rectifying the issue. It initially put in place a manual process to prevent customers being overcharged but it didn’t work.

Yesterday, Mr van Horen outlined an opportunity for CBA to better use data and digital platforms to make it easier for business to get access to loans.

“The strategies of the four banks are broadly quite similar. All of them, and I speak for ourselves, are wanting to grow commercial and business banking,” he said. “We are very committed to keep growing in that space.”

His comments come against a backdrop of increased concerns over an emerging credit squeeze in business lending as banks adopt tighter interpretations of responsible lending laws.

Mr van Horen said falling house prices across Australia were having an impact on the business-lending sector “because of the wealth effect’’.

At the conference, fledging lenders acknowledged the challenges of responsible lending laws and ensuring a supply of credit.

Judo Capital joint chief Joseph Healy said: “There is a transition, but I don’t blame the regulator.

“The industry has lost sight of a lot of core competencies.”

Mr Healy did not expect banks to be able to repair the damage to their reputations or fix cultural ­issues identified at the royal commission for many years. “We all know trust arrives on the back of a tortoise and leaves on the back of a galloping horse,” he said.

Judo expected to receive a full banking licence within a week.

Mark Jones, the chief of peer-to-peer lender Society One, said regulators had to tread cautiously as a tougher interpretation of lending standards, to weed out a small proportion of fraudulent loans, would affect all borrowers.

“We are seeing the regulator move to the highest common denominator,” Mr Jones said.

Society One, whose shareholders include News Corporation, was targeting an ASX listing within 12 to 18 months.