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Speaker 1: Welcome to Fear and Greed Sunday feature, oh Michael Thompson.

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Speaker 1: This week we are heading back into the Fear and

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Speaker 1: Greed vault, all the way back to March of twenty

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Speaker 1: twenty one, when Sean spoke with the boss of Bendigo

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Speaker 1: and Adelaide Bank, Marni Baker. Why because this week Marni

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Speaker 1: Baker announced that she is stepping down after thirty five

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Speaker 1: years with the ASX listed bank. It is a pretty

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Speaker 1: incredible stint and well worth revisiting the time that Marni

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Speaker 1: appeared on the podcast. It was a great insight into

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Speaker 1: the growth of Bendigo and Adelaide Bank. It's remarkable and

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Speaker 1: very long history, where it fits into the sector in

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Speaker 1: Australia and really in a reflection of the time the

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Speaker 1: interview was recorded, the role of the banks in helping

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Speaker 1: the economy during the pandemic. It was recorded as I

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Speaker 1: mentioned back in March of twenty twenty one, I hope

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Speaker 1: you enjoy it.

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Speaker 2: As I've said many times now, the banks have played

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Speaker 2: a vital role during the pandemic and the recession. Over

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Speaker 2: the last year. They've acted as a shock absorb with

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Speaker 2: the economy, working with business and homeland customers to help

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Speaker 2: them get through the tough times. It's a reminder of

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Speaker 2: the hugely important position they hold in Australian society. Bendigo

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Speaker 2: and Adelaide Bank is the fifth largest retail bank in

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Speaker 2: the country. Marny Baker is a managing director of the bank.

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Speaker 2: And I'm pleased to say my guest this morning, Marty,

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Speaker 2: welcome to Fear and Greed.

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Speaker 3: Thanks Sean, it's a pleasure to be here.

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Speaker 2: Marney. Tell us a little bit about Bendigo and Adelaide Bank,

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Speaker 2: particularly for those in the northern parts of the country,

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Speaker 2: in some of the East Coast.

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Speaker 3: Yeah, so you touched on it before, Sean. We're the

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Speaker 3: fifth largest retail bank in Australia. We've been around for

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Speaker 3: one hundred and sixty two years, a retail bank, very

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Speaker 3: much focused on our customers and into around five hundred

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Speaker 3: communities right across Australia, bringing both consumer banking, business banking,

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Speaker 3: and of course we have quite a large agri bank

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Speaker 3: also under our umbrella.

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Speaker 2: Okay, and how are you mostly South Australian, Victorian and

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Speaker 2: New southwayes Heals based.

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Speaker 3: We're a national organization, so represented in every state and territory.

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Speaker 3: Of course, our heritage comes from being a building society

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Speaker 3: back in the gold Rush days in Bendigo, and our

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Speaker 3: head office is in Bendigo itself, So we are the

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Speaker 3: only large bank that actually has its regional headquarters outside

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Speaker 3: of a capital city. And then of course we have offices,

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Speaker 3: like I said, in every other state and territory.

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Speaker 2: Okay, the most recent reporting season, Adelaine and Benigo reported

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Speaker 2: your half year was till December thirty one. You had

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Speaker 2: one of the best results of anyone. Now, revenue had jumped,

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Speaker 2: your cost wincomery ratio for banks, all important had fallen significantly.

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Speaker 2: You had a big drop in bad and doubtful debts,

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Speaker 2: much better performance on costs. How do you do that

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Speaker 2: during a pandemic.

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Speaker 3: We've been very focused, Sean. So look, we were well

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Speaker 3: placed coming into COVID, well capitalized, a strong, resilient balance

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Speaker 3: sheet and sort of good business performance. But I think

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Speaker 3: something like COVID does give you that impetus to even

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Speaker 3: more focus on the things that actually are important to

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Speaker 3: the organization. And I'd come into this role two and

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Speaker 3: a half years ago and we had just embarked on

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Speaker 3: a strategy that saw us reducing complexity in the organization

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Speaker 3: over one hundred and sixty two years, there had been

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Speaker 3: some complexity that had built up, but also investing in

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Speaker 3: capability just to take that next step change that we

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Speaker 3: were looking for in our organization and probably telling our

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Speaker 3: story a lot better than we perhaps have done to date.

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Speaker 3: And you touched on that earlier when you asked me

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Speaker 3: the question that perhaps some people didn't have a background

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Speaker 3: of who we are. So it was a strategy that

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Speaker 3: we employed. COVID came about and we needed to just

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Speaker 3: revisit that and make sure that it was still solid

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Speaker 3: and sound, and we found that it was with a

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Speaker 3: little bit of resequencing, of course, but we have embarked

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Speaker 3: on a pretty ambitious growth and transformation strategy. That is,

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Speaker 3: as you could see by our results, our most recent

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Speaker 3: results is actually we're very pleased that we're actually getting

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Speaker 3: the outcomes from the focus and the effort that's being

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Speaker 3: put in by the organization.

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Speaker 2: Banks always talk about transformation. Bring it down to my level,

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Speaker 2: to my mother's level. What does a bank mean when

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Speaker 2: it's transforming? When you say digital transforming, is it about

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Speaker 2: doing what your customer wants? Like I'm trying to get

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Speaker 2: a really tangible way of understanding what bank transformation means.

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Speaker 3: Well, we've always been very much a customer focused organization.

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Speaker 3: Our purpose goes back, like I said, one hundred and

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Speaker 3: sixty two years, and it's about feeding into prosperity and

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Speaker 3: not off it, and that stayed central to who we

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Speaker 3: are over all that time, and at the very center

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Speaker 3: of that is our customers. So we call ourselves a

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Speaker 3: listening organization where we're always talking with our customers understanding

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Speaker 3: what are they needing from our financial institution and what

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Speaker 3: are the behavioral changes that we're seeing, you know, in

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Speaker 3: our customers. So, you know, we've seen quite a lot

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Speaker 3: of that, especially of more recent times, but we've seen that,

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Speaker 3: you know, over the last few decades, especially as things

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Speaker 3: like the Internet's come into play. You know, technology playing

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Speaker 3: an even bigger role now, so you're right around the

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Speaker 3: digitization or digital being a bigger component now of that transformation.

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Speaker 3: But it really also is just understanding, you know, what

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Speaker 3: your customers are looking for from a financial institution, and

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Speaker 3: it's it is as simple as just getting rid of

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Speaker 3: processes that don't make any sense anymore for a customer,

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Speaker 3: making sure that we're streamlining so that when they talk

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Speaker 3: to different parts of the organization. Because if I go

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Speaker 3: back in time, you know, to my early days in banking,

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Speaker 3: it was branches that's where you spoke with customers, but

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Speaker 3: now it can be through a call center, online web chat,

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Speaker 3: still through a branch, even to make sure that the

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Speaker 3: customers not having to repeat themselves when they're you know,

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Speaker 3: they're speaking to someone different in the organization. So it

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Speaker 3: can be as simple as just improving the processes that

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Speaker 3: you do have, removing duplication, you know, where it's just

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Speaker 3: in peeding the customer experience and just making it easier

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Speaker 3: for people to be able to do business with us

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Speaker 3: and for us to be able to serve our customers

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Speaker 3: in the way that we believe and our customers should

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Speaker 3: expect of us.

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Speaker 2: So you've mentioned branches there, and for decades there's been

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Speaker 2: a debate about how many branches is the right number

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Speaker 2: of branches. You cut some of your branches in the

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Speaker 2: last twelve months, how important is the bank branch going forward?

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Speaker 3: So we run quite a unique model, Sean, in the

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Speaker 3: sense that we have corporate branches like you would traditionally

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Speaker 3: see in other banks and other financial institutions, but we

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Speaker 3: also have what is a very unique community bank model

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Speaker 3: where we have partnered with communities that's now been in

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Speaker 3: place for just over twenty years, where we partner with

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Speaker 3: communities and the communities themselves actually own those branches and

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Speaker 3: operate those branches under our license with our products and

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Speaker 3: the backing of our balance sheet from a credit perspective, etc.

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Speaker 3: But they really take ownership within their local communities and

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Speaker 3: then we share the revenues between the community and ourselves

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Speaker 3: and in the community itself. Those revenues are then decided

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Speaker 3: by the community and go out to build infrastructure, to

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Speaker 3: provide as little as football jumpers on the backs of

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Speaker 3: kids playing football, to building community centers, getting doctors back

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Speaker 3: into their local communities. So it's a very sort of

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Speaker 3: different model and not something that you would see anywhere

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Speaker 3: in the world actually, because we have searched the world

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Speaker 3: to see if there was anything like it, and it

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Speaker 3: is very unique. And in the twenty years, just over

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Speaker 3: twenty years, two hundred and fifty million dollars has been

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Speaker 3: returned back into communities through this community bank network. Like

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Speaker 3: I said, that's gone to just building the sustainability of

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Speaker 3: communities right across Australia.

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Speaker 2: So back to the branch comment, is that a reflection

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Speaker 2: of corporate plus community branches. There's good reason for it.

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Speaker 3: Yeah, the ones that we have has been in response,

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Speaker 3: So the corporate branches have been in respect. It's just

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Speaker 3: a change in customer needs. You know, less people are

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Speaker 3: coming into the branch to transact and are doing that

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Speaker 3: more online now. So some branches we've reduced the floor

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Speaker 3: of print or the footprint of the branch. Others we

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Speaker 3: have adapted or change and what we're calling branch of

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Speaker 3: the future or the network of the future, where we

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Speaker 3: have adapted it so our local business customers can come

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Speaker 3: in and use that space where they may have an

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Speaker 3: online business and be able to have a shop front

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Speaker 3: in a street front to be able to accelerate the

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Speaker 3: awareness of their businesses. And we've also seen with the

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Speaker 3: community bank branches and some of those which are run

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Speaker 3: by the communities themselves through a board structure, a governance structure,

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Speaker 3: as you would see any company being ran. And they

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Speaker 3: may have had a number of sites and so they

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Speaker 3: may have been in close proximity to each other and

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Speaker 3: it just didn't make sense to have as many in

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Speaker 3: close proximity, and they've brought them together. But it's about adapting.

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Speaker 3: It really is about adapting to the changing needs of customers.

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Speaker 2: So one thing I think the banks didn't incredibly will

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Speaker 2: last year. And you know, everyone loves bashing banks, but

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Speaker 2: I don't think the economy would be where it's at

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Speaker 2: today if it wasn't for the banks. Obviously, the big

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Speaker 2: four yourself, sun coorb some of the smaller guys around

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Speaker 2: as well. And the thing that I think was really

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Speaker 2: critical was the ability for the banks to allow customers

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Speaker 2: to freeze their loans and we still have to pay

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Speaker 2: them back. So that's all fair, but the banks could

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Speaker 2: actually withstand the shock better than the individual could withstand

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Speaker 2: the shock, or at least it was shared. So what

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Speaker 2: I'm asking in the mortgage market, how many of your

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Speaker 2: loans were frozen? And then where are you up to now?

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Speaker 3: Yeah, I think it's important just to be clear that

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Speaker 3: the loans weren't frozen. We, like the whole banking industry

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Speaker 3: did so it wasn't just the few larger banks, it's

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Speaker 3: the whole banking industry. We got together and made that decision,

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Speaker 3: and that was in conjunction with the government and with

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Speaker 3: regulators to ensure that we're able to do it in

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Speaker 3: a seamless way, but we provided a holiday period so

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Speaker 3: where customers could defer their interest and principal payments on

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Speaker 3: their loans whilst they managed through the uncertainty on their

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Speaker 3: lives or their businesses through the COVID period, So it

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Speaker 3: was a holiday period rather than being frozen. I think

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Speaker 3: it's really representative of how you can come together as

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Speaker 3: an industry, all focused on the outcome of ensuring that

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Speaker 3: Australians were able to get through this period of time

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Speaker 3: because we all didn't know what we're really facing into

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Speaker 3: at that point in time, so it took a concerted effort.

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Speaker 3: But the number of loans that continue to be on

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Speaker 3: deferral arrangements has come down steadily and especially of more

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Speaker 3: recent months, and it's dropped from our peak in our

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Speaker 3: organization in mid twenty twenty was around six point nine

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Speaker 3: billion dollars in value of loans that were on these

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Speaker 3: deferral arrangements and has come down over ninety percent since

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Speaker 3: then to now less than one percent of our total

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Speaker 3: loan book. That says at the thirty first of January,

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Speaker 3: which is the latest update that we've made to the market,

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Speaker 3: and since then, courses come down even further, so we're

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Speaker 3: really please.

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Speaker 2: Yes, how do you think the economy is traveling? Because

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Speaker 2: you do get a bit of an insight into what's

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Speaker 2: going on through mortgages and business loans. How do you

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Speaker 2: think the economy is traveling?

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Speaker 3: Yeah, Look, we've seen a strong improvement in the economy.

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Speaker 3: I think everyone would say that, and the confidence in

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Speaker 3: the economy, and I think that's a stark change to

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Speaker 3: what we thought we may have been facing into just

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Speaker 3: twelve months ago. You know, we've see business confidence and

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Speaker 3: consumer sentiment up. I think it helps the ongoing low

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Speaker 3: rate environment and the work that the Reserve Bank's done there.

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Speaker 3: We're seeing a growing housing market, improving jobs market with

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Speaker 3: some of the latest data that's out and something that's

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Speaker 3: sort of dear to our organizations hard is that really

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Speaker 3: continued growth in regional Australia and our customers. You know,

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Speaker 3: they've shown remarkable resilience and adaptability during this time. So

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Speaker 3: through this period, what we've seen with business customers and

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Speaker 3: how they've responded and how they've innovated and in some

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Speaker 3: case of created new revenue streams and models has been

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Speaker 3: quite remarkable and it just shows the resilience of the sector.

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Speaker 3: And it gives me personally great confidence and the ability

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Speaker 3: to grow. And like I said before, we also have

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Speaker 3: an agri business as well, so you know, an agri

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Speaker 3: production and exports. They're also bouncing back strongly and new

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Speaker 3: market opportunities emerging.

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Speaker 2: What about government support during the pandemic, do you think

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Speaker 2: that was adequate? And they're looking at tweaking changes at

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Speaker 2: the moment to rules around small businesses. We've got responsible

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Speaker 2: lending laws coming up in coming weeks. But do you

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Speaker 2: think generally the government has done a good job in

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Speaker 2: helping businesses and individuals.

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Speaker 3: Yeah. Look, I think you've only got to look at

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Speaker 3: Australia when you compare it to what's happening elsewhere in

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Speaker 3: the world. I think it was one of the really

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Speaker 3: positive stories to come out early through COVID was the

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Speaker 3: way that industry, government and regulators all worked together and

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Speaker 3: the stimulus that was put into the system, not only

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Speaker 3: by the government in a fiscal sense, but also what

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Speaker 3: the Reserve Bank did. I think has held us in

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Speaker 3: really good stead through this period when, like I said,

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Speaker 3: none of us knew, you know, necessarily where this was

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Speaker 3: actually going to end, because this was a health crisis,

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Speaker 3: you know, predominantly, and it was the economic impact of

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Speaker 3: that health crisis, and a health crisis that we're still

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Speaker 3: navigating through and we're still managing. So you know, even

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Speaker 3: the recovery of this now needs really careful management. And

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Speaker 3: I know, you know, the government through the more recent

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Speaker 3: budget and of course the one that's coming in May,

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Speaker 3: will be looking to continue to sort of underpin and

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Speaker 3: sort of shore up that economic recovery.

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Speaker 2: You are in an incredibly competitive sector and we've seen

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Speaker 2: that Westpac is white labeling deposit products for after pay,

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Speaker 2: the buy now, Pay later group. How can you keep

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Speaker 2: ahead of that competition.

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Speaker 3: I think it goes back to what I was saying

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Speaker 3: before Sean around really listening to your customers. You know,

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Speaker 3: it is interesting. I'm a big advocate for the fintech sector,

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Speaker 3: you know, I do like to see where innovation is

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Speaker 3: coming in. You know a lot of these the buy now,

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Speaker 3: Pay Later, a lot of the other FinTechs that are

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Speaker 3: honing in on a certain part of the customer experience

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Speaker 3: and doing it really well and preempting what customers are

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Speaker 3: looking at. And that's where you get great innovation, and

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Speaker 3: that's where it actually lifts the bar, you know, across

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Speaker 3: the whole industry. You know a lot of people are

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Speaker 3: focusing on the buy now, pay later. But you know,

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Speaker 3: if you think about it in the sense of you know,

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Speaker 3: ATMs and then you know FPOs changed the way that

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Speaker 3: they access cash. So this is happening all the time,

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Speaker 3: this sort of evolution, and now you're seeing a buy now,

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Speaker 3: pay later that's stepping into probably the credit card market there,

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Speaker 3: and you'll continue to see more innovation and evolution, I'm

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Speaker 3: sure as we move forward. And it's something too I

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Speaker 3: think to watch really closely. Marny, thanks for talking to

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Speaker 3: Fearing Greed Pleasure Sean lovely to meet you. That was

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Speaker 3: Marti Baker, Managing director of the Bendigo and Adelaide Bank Group.

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Speaker 2: F