2019 CEO survey: Matt Comyn, Commonwealth Bank

Commonwealth Bank CEO Matt Comyn. Picture: AAP

Every year The Australian’s John Durie asks some of the biggest names in Australian business five key questions about what’s coming in the year ahead.

Here, in his own words, is what Commonwealth Bank CEO Matt Comyn sees ahead in 2020.

You can read more from the CEO Survey across this summer.

How is your company affected by low-interest rates and what is needed to boost the economy?

Low-interest rates aim to stimulate the economy by encouraging investment, and in doing so, they can also drive up asset prices. They impact our customers in different ways. We are acutely aware that lower rates reduce interest income for our seven million depositors.

Lower rates reduce the minimum repayments for the majority of our 1.5 million home loan customers, although most customers opt to leave their repayments unchanged and so their cash flow is not improved. Over time, this will reduce household indebtedness, which will encourage consumption in the medium to long term. Low rates have also contributed to a turnaround in the residential property market – owners of assets benefit from rising asset prices, but customers looking to enter the property market may find it harder if lower rates drive up house prices further. Lower rates make it more difficult for banks to balance the needs of all of these customer groups, but that is what we try to achieve.

Australia needs income growth to stimulate the economy. We saw some positive impact from the government’s one-off tax refunds earlier this year, and there may be an opportunity to bring forward planned future tax cuts to help increase disposable income for households on a persistent basis. There are also opportunities to bring forward infrastructure investment and drive structural reform aimed at driving productivity – areas that both federal and state governments are working on. The other big opportunity is taking steps to further encourage small and medium businesses to invest, innovate and grow. This is particularly important given the critical role that small and medium-sized businesses play in driving economic growth for the country.

What is the impact of government regulations on your company, including those applying to the financial sector?

Regulation plays an important role – particularly in the financial sector – in ensuring a good balance is struck between stability, efficiency and fairness of the system as a whole and for individual customers. While in many cases these objectives can be driven simultaneously, at times there are trade-offs that need to be considered. One of the most important principles, though, is that regulation is applied uniformly in areas where customer outcomes are at stake – for example in the application of responsible lending rules, financial crime, cybersecurity – to ensure that weak links aren’t created within the industry that would lead to poor customer outcomes.

What percentage of company revenues are spent on research and development, and how is your company using technology to improve performance?

We invest over $1.4bn each year in a range of projects to make our own business simpler and better for our customers. Approximately $1bn of this relates to technology – and we have the capacity and appetite to invest more. Our primary constraint is not a financial one; it is access to talent required for the high-quality execution of IT projects.

Technology is critical to our business. It continues to fundamentally change how people engage with the world and consume goods and services. We continue to reshape our business through technology to better meet these changing customer preferences.

Technology has allowed us to radically improve our service proposition – for example by using analytics to help our seven million digitally active customers better understand and manage their finances, or to connect them with a range of benefits they may be entitled to.

We also very much recognise that many of our customers still like to do their banking face-to-face. For these customers, we are not only committed to maintaining the largest branch network in the country and Australian-based call centres, but also to bringing new technology to help our people deliver even better and more personalised service. We see all of the change over the past decade as just the tip of the iceberg. We continue to see enormous potential in continuing to bring together the best service experience with the best technology capability to drive really exceptional customer outcomes.

What are the three major policy issues facing the country and what should be done about them?

In the short-to-medium term, one of the absolute priorities is to help stimulate wages growth through a balance of monetary and fiscal measures that will then flow through to the rest of the economy. We would also be supportive of productivity reforms that help drive job creation, increase employment participation and advance the skill base of the workforce.

This would include education and training policies designed to take advantage of the changes being brought about by the digital economy. A third would be increased investment infrastructure, not just in transport but in physical and mental health, primary, secondary and higher education, energy, water and IT, for example, to ensure Australia remains globally competitive.

What are the major impediments to long-term growth facing your company and what can or is being done about them?

As Australia’s largest bank, our success is very much tied to the success and health of the Australian economy. What’s good for the economy is good for the Commonwealth Bank.