Nationwide Building Society chair Kevin Parry preaches patience to ANZ boss Nuno Matos
‘Don’t get distracted by doing too much too soon’ — Britain’s largest mutual lender chief tells ANZ to exercise patience in its $4.9bn Suncorp integration.
A top British banker has warned ANZ chief executive Nuno Matos not to move too fast on his $4.9bn Suncorp Bank integration, saying the success of such mergers depends on patience, precision and a ruthless focus on execution.
Kevin Parry, chair of the $756bn British mutual Nationwide Building Society, said Mr Matos needed to keep his eye on the prize as ANZ looked to fold the Queensland lender into its operations.
“Don’t get distracted by doing too much too soon, it’s a case of doing it to a very high standard,” he said.
“It is an awful lot of attention to an awful lot of detail.”
The warning comes after Mr Matos, who took charge of ANZ in May, declared last month that he would accelerate the integration of Suncorp Bank, dumping two of the bank’s three customer-facing platforms in favour of one: ANZ Plus.
Speaking on a recent trip to Australia to attend the Business Council of Co-operatives and Mutuals, Mr Parry had his own $6bn takeover on his mind.
Nationwide, the UK’s largest mutual lender and holder of nearly 20 per cent of mortgages in the country, picked up Virgin Money last year in a deal that now gives it 17 million customers.
Mr Parry said the Virgin Money acquisition was not a tech play, noting Nationwide already boasted a comparatively advanced banking platform. Instead he said it was about getting access to a new class of customers, with small business borrowers and customers across the north of England and Scotland central to the acquisition.
Virgin Money itself was a product of multiple mergers, including NAB’s former UK arm Clydesdale Bank and Yorkshire Bank, leaving it with three separate technology systems.
Bank of Queensland holds the licence to Virgin Money in the Australian market.
The long-term plan is to transition Virgin Money’s customers into Nationwide, with Mr Parry saying technology was always the slowest part of any integration.
“Don’t clutter it up, you want to have the right functionality,” he said.
Unlike Australia, the UK’s mutual sector is a major player in the banking sector.
Mr Parry said while Nationwide had been around far longer than Australia’s mutual or customer-owned banks, the British mutual sector had also consolidated significantly.
“Britain has come down to a small number of relatively large mutuals who have the ability to scale up,” he said.
“Scale is important, the cost of technology and regulation, the cost of funding different services is hard to do if you’re small.”
With 605 branches across the UK, Nationwide has the biggest footprint of the country’s banks, many of which have been retreating from the high street.
Mr Parry said branches were part of the banking sector’s future, but said many would change in how they were used.
Instead of being five-day full service banks, many are now open a few days a week with staff delegated to call centre duty on off-days.
Cash also remains central to Nationwide’s offering, despite a recent parliamentary review finding the use of banknotes was becoming increasingly rare in the UK. Mr Parry said Nationwide knew how important cash was to some customers, including the poor, who often used it for budgeting.
Several Australian banks have retreated from offering banknotes in branches, with ANZ leading the way by turning its branches into “specialist hubs” where cash is no longer dispensed over the counter.
Like its Australian peers, Nationwide is deepening its use of artificial intelligence, deploying it in software development and complaints handling, as well as credit ratings and credit worthiness. Mr Parry said Nationwide was “not inclined for things to go out without them being read by a human”.
“It’s a huge opportunity but it comes with risks and we’re very used to them in the financial sector,” he said. “Not to use AI will produce a cost base that is not sustainable.”
Mr Parry endorsed Australia’s proposed scam-loss reimbursement model, which would compel digital giants Google and Meta to share liability with banks.
Banks in the UK largely refund all scam losses.
Mr Parry said he was concerned about the way regulation was playing out across the banking market, pointing to the Basel reforms in the wake of the GFC.
He said politicians and regulators needed to have a discussion about the levels of capital locked up in the banking system.
“Getting clear what capital protects and what liquidity protects, that is a meaningful reform,” he said.
Having chaired Nationwide since 2016, Mr Parry said politicians and regulators had to have a “grown-up discussion” about whether all bank failures should be prevented.
“If you’re in a situation where a bank is failing and it’s possible to make sure all the depositors are reimbursed, I don’t think it does matter if a bank fails,” he said.
However, Mr Parry said every country had “too big to fail” banks, which were critical to the payments systems.
“If you want to encourage new banks, you have to accept that some will fail,” he said.
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Originally published as Nationwide Building Society chair Kevin Parry preaches patience to ANZ boss Nuno Matos
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