2019 CEO Survey: Steve Johnston, Suncorp

Suncorp CEO Steve Johnston. Photo Mark Cranitch.

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 Suncorp’s Steve Johnston sees ahead in 2020.

Read more from the CEO Survey.

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

What we are observing during this period of successive rate cuts is that many homeowners and businesses are taking stock of the economic challenges confronting them. They are typically saving the extra funds as a safety net or using them to get ahead on loans. While this is good prudential behaviour, it carries negligible economic stimulus. Any additional cash rate decision must also balance the competing needs of deposit holders, particularly as we see an ageing population increasingly relying on its retirement savings. Supporting the growth of small business across Australia is a key step in boosting the economy. When local businesses succeed, local communities thrive. It’s why I’m proud we announced a $3bn lending pledge of new credit for small business customers earlier this year, and we were one of the first banks to offer least-cost routing across our fleet of merchant terminals.

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

On the back of several inquiries, including the royal commission, we’ve made a much larger investment in regulatory work at Suncorp. We want to make sure that it’s not just about compliance – it is about delivering better outcomes and experiences for customers. That requires investment in training, systems, and processes, but it’s important work that is being prioritised. Every person should feel confident they are being offered fair-value products and services that are right for their particular needs and are in the best interests of the customer.

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

Digitisation is key to improving performance, so it makes sense that we invest in those projects. Our Digital Labs team develops and tests ideas for digitisation to improve customer and employee experiences. We also partner with start-ups and call on ideas from our employees to help us meet more customer needs through digital platforms.

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

● The government needs to eliminate the punitive stamp duty and GST applied to insurance products, which is exacerbating affordability and, in turn, costs insurance customers billions of dollars each year. It’s particularly unfair for those who live in hazard-prone areas.

● We also need all levels of government to work together to help build community resilience and protect lives and property from hazards like floods and bushfires. While we’ve had an increase in disaster mitigation funding, we need more.

● The current prudential and regulatory settings need to be critically assessed to challenge the status quo and ensure they foster competitive neutrality across the tiered banking system instead of protecting, and strengthening, the market power of the four major banks.

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

We believe addressing the entrenched capital advantage held by both the majors and non-bank sector will enable Australian mortgage holders and small business owners to have easier access to credit at more competitive rates. Greater competition will drive innovation and result in greater outcomes for everyday Australians who are wanting to get ahead.