As the robots are coming, NAB’s Thorburn goes out on a limb on bank job losses

NAB stands alone as the most outspoken of the big four on automation.

National Australia Bank chief executive Andrew Thorburn. Picture: Hollie Adams

Andrew Thorburn’s first job in a bank branch in 1990 was in the Auckland suburb of Manurewa.

At the time, the branch had 32 staff; now it has five and is one-fifth the size it was almost three decades ago.

“Yet it’s probably doing a lot more business,” the National Australia Bank chief said.

The biggest lesson from Thursday’s creditable $6.6 billion cash profit is that the robots are coming, with bank workforces to be dramatically reshaped in a way that makes the Manurewa branch’s gradual evolution look positively benign.

NAB stands alone as the most outspoken of the big four on automation, which Thorburn warned would make 6000 jobs redundant — equal to 18 per cent of the bank’s workforce — over the next three years.

On the flip side, about 2000 new jobs will be created for people with specialist digital and technology skills.

Thorburn dipped his toe in the water on robotics in May.

In an interview with The Australian, he said there were a lot of people in the bank who were performing tasks that would inevitably be automated.

“So how do we communicate that change?” the NAB chief asked. “And how do we try and get as many people as we can into the new world?”

The answer became clear on Thursday — for NAB, there will be no hiding behind glib phrases like “staff numbers will trend down over time”.

This is a reality show, not some far-fetched fantasy, and the clear message to tens thousands of financial services workers around the country is to adapt or discover one day that not only have you lost your job but your skills are suited to a bygone era.

It’s a brave move by Thorburn to make NAB such a large target.

Senior leaders fanned out to engage with senior politicians on its workforce plans, as a rumour swept through Melbourne that the CEO had taken an unsolicited call from Victorian Premier Daniel Andrews.

It wasn’t true, but calls to political leaders in Victoria — NAB’s home state and likely location for most of the cuts — would have been a priority.

Over in South Australia, where the big four are fighting the state’s proposed $370 million bank tax, NAB was excoriated for announcing a record profit and the 6000 lost jobs only hours after the upper house rejected the tax by a single vote.

Treasurer Tom Koutsantonis slammed NAB for its “deceitful” campaign against the tax, saying the state could bear the brunt of 500 job cuts.

NAB responded that Koutsantonis’s statement was “incorrect”.

The point is that NAB’s conscious decision to take a leadership position on the industry’s future comes with a cost.

Thorburn plans to stay focused and not be buffeted by the noise, of which he only got a taste on Thursday.

As he presents it, the strategy is not to shrink the bank but grow it through a calculated program of investment — an extra $1.5bn over three years to yield cost savings of more than $1bn by the end of 2020.

The percentage of customer needs that can be met digitally will lift from 30 per cent to 65 per cent in three to five years, with revenue per banker climbing 60 per cent.

The number of IT applications will be slashed by up to 20 per cent, and a flatter structure will be introduced so there’s a maximum of seven layers between Thorburn and the customer.

In NAB’s heartland of small to medium-sized businesses, the CEO wants 80 per cent of loans to be approved within 24 hours.

The bank has to be much simpler if it’s to prosper.

More broadly, Thorburn says NAB has to win in the execution game against its three main rivals.

He intends to use fintech to help achieve that, and has big plans for Ubank as a digital-only player.

An incursion from big tech is an another area to watch, but Thorburn rates it low to medium in terms of NAB’s top 10 threats.

The NAB boss, though, reckons something will happen over the next five years or so to challenge the bank’s profit stream or business model. It’s imperative to be in the best possible shape to meet the threat. “So this is a no-regrets announcement today,” he said.