2020 CEO Survey: Peter King, Westpac

COVID-19 has accelerated what was already a rapid adoption of digital banking, says Westpac chief Peter King.

What are the three enduring lessons or changes to flow from COVID-19?

From a business and workforce perspective, COVID-19 has highlighted the importance of agility and shown how quickly changes can be made. We have learnt a lot about employee work preferences and our ability to manage a distributed workforce. Our recent investments in technology left us well positioned to respond to the challenges of COVID-19, allowing us to scale from an average of 1,000 to 22,000 people working from home over a two-week period in March. We have sustained around 20,000 remote connections per day and have seen 61 million audio and video virtual meeting minutes in September (up from 18 million in March 2020).

It is likely that we will have more of a distributed workforce in the future, with many of our people indicating they have enjoyed the benefits of working remotely.

In terms of our customers, COVID-19 has accelerated what was already a rapid adoption of digital banking. Since the start of the pandemic restrictions, more than 100,000 customers have started banking online with us for the first time, and it is not only the younger demographic. We have seen strong growth in customers aged over 45 becoming more digital. More than 98 per cent of customer transactions are now done online or with cards and phones.

This year has also emphasised the importance of being there for our customers in times of need. As I do regularly, I’ve listened in to the calls that come to our Customer Care team and been struck by the real-life impact of COVID-19. The co-ordinated response between the industry and the federal government has been vital to supporting Australians.

How would you rate the shape of the Australian economy as we head into the new year?

I often think how lucky I am to live in a country like Australia, but this year it has been highlighted even more. Talking to our partners in the US and Europe, it’s clear their roads to recovery are more challenging as they battle multiple waves of the virus.

By year’s end, we expect economic activity in Australia to be 3.5 per cent lower than at the end of 2019. There is, however, cause for optimism as economies reopen and major progress is made on a COVID-19 vaccine. It has also been encouraging to see many of our customers on deferral packages returning to repayments. We expect a strong increase in economic growth in the September and December quarters, driven by the lift in spending associated with the reopening of the economy.

What three reforms are needed to sustainably grow the economy?

Fiscal policy needs to continue to play more of a role in driving demand alongside monetary policy. Infrastructure spending boosts demand and, if appropriately chosen, can lift productivity. There needs to be a more co-ordinated approach to infrastructure investment. It will be important to get the mix right between policies that have long lead times but will boost productivity, and policies that can provide an immediate boost to demand while still lifting productivity.

What are the three best growth opportunities for your company in 2021?

Westpac has refreshed its strategy and we have a clearer purpose, a sharper focus on markets and businesses we’re in, and three clear priorities: fix, simplify, perform.

First and foremost, we need to fix our issues so we can move forward, and this includes improving risk management. We will progress the exit of further specialist businesses, opening up opportunities to improve our capital position and reset our cost base. We are also targeting significant improvement in mortgages and have introduced a simpler line of business model to drive growth.

What impact will digital transformation have on your company?

Westpac has been focused on digital transformation for some time but COVID-19 has accelerated the pace of change and shown what is possible. This year we changed aspects of our home loan operations to incorporate digital processes, including virtual signing of loan documents and a new way to verify customers’ identity over video conference.

We want to keep pace with changing customer preferences and ensure we appeal to as wide a customer base as possible. As part of this, we have started the rollout of our new mobile banking app to deliver a more intuitive and user-friendly experience for customers, and plan to bring this to all our customers in 2021.

We will continue to make investments in digital to create better customer experiences. Partnerships will play an important part here and we are excited about the opportunity to collaborate with partners, including Afterpay, on our new digital banking platform.

How would you rate business, state and federal government performance this year?

The pandemic has impacted on every aspect of our lives, and small businesses have been some of the most affected. We saw many businesses adapt with the majority of their staff working from home, while others opened up new lines of work to keep operating. Australian businesses have shown enormous flexibility and innovation as they navigated their way through COVID-19.

All of this would not have been possible without the co-ordinated support and early intervention of the state and federal governments. Governments have shown great leadership and acted quickly and decisively to firstly contain the virus, then put in place the economic support measures to cushion the economic impact on people and business.