WEBVTT - Blurring the lines of banking 0:00:00.480 --> 0:00:02.000 What even is a bank? 0:00:02.160 --> 0:00:05.280 The bounds on what constitutes a bank is changing quite rapidly. 0:00:05.440 --> 0:00:08.719 That question might be getting harder to answer because the 0:00:08.800 --> 0:00:11.560 rules around who can be called a bank are changing. 0:00:11.800 --> 0:00:13.160 It's more than just that label. 0:00:13.240 --> 0:00:15.960 So you need to understand the credit rating, need to 0:00:16.040 --> 0:00:20.079 understand the history. You need to understand their practices around governance, liquidity, 0:00:20.239 --> 0:00:20.960 risk management. 0:00:21.040 --> 0:00:23.080 So those things are really important. 0:00:23.120 --> 0:00:25.160 What do you need to know about that? How could 0:00:25.160 --> 0:00:28.640 it affect your financial future? Is it easy to lend money? 0:00:29.200 --> 0:00:31.560 Yes, easier to lend money, hard to get it back. 0:00:32.080 --> 0:00:35.560 So this is particularly when you're in a pretty soggy 0:00:35.640 --> 0:00:36.479 economy like this. 0:00:37.120 --> 0:00:39.920 Today, we're taking a look with an expert and two 0:00:39.960 --> 0:00:44.400 institutions that have hands on experience dealing with your money. 0:00:44.720 --> 0:00:47.120 I'm Garth Bray and this is shared. 0:00:46.960 --> 0:00:49.760 Lunch investing and involves the risk you might lose the 0:00:49.800 --> 0:00:52.479 money you start with. We recommend talking to a licensed 0:00:52.520 --> 0:00:57.000 financial advisor. We also recommend reading product disclosure documents before 0:00:57.040 --> 0:00:59.800 deciding to invest. Everything you're about to see and here 0:01:00.120 --> 0:01:01.480 is current at the time of recording. 0:01:01.760 --> 0:01:04.880 To start, let's look at the big picture. Chanelle Julie 0:01:05.000 --> 0:01:07.600 is a senior lecturer in banking and Finance at the 0:01:07.680 --> 0:01:11.320 University of Auckland Business School. She spends her time studying 0:01:11.319 --> 0:01:14.640 how New Zealand's financial system actually works and where it 0:01:14.720 --> 0:01:17.759 might be heading next. What is a bank? 0:01:18.840 --> 0:01:23.920 Thanks so much Garth. The economic answer is easier than 0:01:24.000 --> 0:01:27.840 the legal answer. I guess bank is an institution that 0:01:28.080 --> 0:01:33.280 takes deposits, so borrows essentially from depositors, and then invests 0:01:33.360 --> 0:01:37.720 these in loans, usually to households, businesses and the like. 0:01:38.840 --> 0:01:42.800 So the legal distinction is that there is a list 0:01:42.880 --> 0:01:46.720 maintained by the Reserve Bank of New Zealand. And as 0:01:46.720 --> 0:01:49.200 we're going to discuss, I guess the bounds on what 0:01:49.240 --> 0:01:51.560 constitutes a bank is changing quite rapidly. 0:01:52.040 --> 0:01:54.480 So the bounds are changing, the list is getting longer. 0:01:54.520 --> 0:01:56.200 It's easier to be called a bank. 0:01:56.680 --> 0:02:00.280 I would say, effectively, yes, But I think the buck 0:02:00.360 --> 0:02:04.480 rarely stops in what we call lender of last resort access. 0:02:04.520 --> 0:02:08.000 So what kinds of backstops and public guarantees sit behind 0:02:08.040 --> 0:02:12.639 these institutions. When an entity is protected by those backstops, 0:02:13.040 --> 0:02:15.520 I would say it's a bank in that traditional sense. 0:02:16.200 --> 0:02:22.320 When it doesn't, it may have access to certain channels 0:02:22.360 --> 0:02:28.359 such as deposit insurance and deposit compensation, but I would 0:02:28.400 --> 0:02:30.480 say that's still a key distinguishing factor. 0:02:31.160 --> 0:02:33.959 So at the moment there are a bunch of banks. 0:02:34.000 --> 0:02:36.680 Is are much wider, probably thirty odd institutions that are 0:02:36.680 --> 0:02:40.079 covered by the deposit compensation scheme, which is this. Maybe 0:02:40.120 --> 0:02:41.560 you can talk a bit about what that is, because 0:02:41.560 --> 0:02:43.480 that's quite new for a lot of people too. 0:02:43.639 --> 0:02:46.639 Yeah, it is. It came into effect in July twenty 0:02:46.680 --> 0:02:50.640 five and New Zealand actually was the last OECD country 0:02:50.760 --> 0:02:54.320 to bring in deposit insurance, so it's quite interesting in 0:02:54.360 --> 0:02:58.440 that sense that we lasted so long without it, and 0:02:58.760 --> 0:03:04.160 it currently ensures all deposits up to one hundred thousand 0:03:04.560 --> 0:03:06.000 New Zealand dollars. 0:03:06.080 --> 0:03:10.079 But it's at certain institutions, and even in those institutions, 0:03:10.080 --> 0:03:12.360 it's only to be certain kinds of accounts. 0:03:11.880 --> 0:03:14.040 Potentially, yes, yes, that's right. 0:03:14.160 --> 0:03:15.840 So if you're in a pie fund or something that's 0:03:15.840 --> 0:03:18.240 a whole separate kind of an entity, just because it's 0:03:18.240 --> 0:03:20.760 worth some institution, it's not covered, for example. 0:03:21.200 --> 0:03:24.200 Yes, So it rarely depends on whether the institution is 0:03:24.240 --> 0:03:29.560 a deposit taking institution. And previously we had the we 0:03:29.600 --> 0:03:33.200 had legislation that covered banks and then non bank deposit takers, 0:03:33.440 --> 0:03:39.080 but these are gradually being consolidated into an overarching legislative framework. 0:03:39.520 --> 0:03:43.000 So is it going to get harder to tell what 0:03:43.120 --> 0:03:46.400 a bank is and whether if something is calling itself 0:03:46.400 --> 0:03:50.040 a bank, that it's really as safe as any other 0:03:50.120 --> 0:03:50.600 kind of bank. 0:03:51.280 --> 0:03:55.520 So I believe that the Reserve Bank will still maintain 0:03:55.560 --> 0:03:59.160 its list of what constitutes a bank or not. And 0:03:59.200 --> 0:04:05.280 there are certain requirements such as credit ratings, minimum capital 0:04:05.360 --> 0:04:09.640 requirements that so called banks will still have to maintain, 0:04:09.720 --> 0:04:15.200 So that provides some assurance and distinguishing factors. But it's 0:04:15.240 --> 0:04:19.200 true that in terms of the services that are being offered, 0:04:19.560 --> 0:04:23.800 the line between what we traditionally know as banks and 0:04:24.400 --> 0:04:29.000 those institutions that are effectively offering banking services borrowing and 0:04:29.080 --> 0:04:30.840 lending are being blurred. 0:04:31.520 --> 0:04:33.800 That's the big picture. Now it's zoom in on a 0:04:33.800 --> 0:04:37.960 couple of financial institutions, starting with SBS Bank. The group 0:04:38.040 --> 0:04:40.839 chief executive Mark McLain and I sat down to talk 0:04:40.839 --> 0:04:42.760 about who they are and what they do. 0:04:43.160 --> 0:04:47.560 ESBs Bank was founded back in eighteen sixty nine, so 0:04:47.560 --> 0:04:49.400 one hundred and fifty seven years old or one hundred 0:04:49.400 --> 0:04:51.080 and fifty seven years young, which way everyone to do it? 0:04:51.120 --> 0:04:53.680 So and it's found on Our story starts back. 0:04:53.720 --> 0:04:56.920 There's a scotman about twenty seven years old and he 0:04:57.000 --> 0:04:59.080 decided to walk from the need into in vocable. So 0:04:59.120 --> 0:05:01.599 the two undred and four comments across the South and 0:05:01.680 --> 0:05:04.600 train and he got down to South and Vcago and 0:05:04.640 --> 0:05:06.240 he said there must be a better way that people 0:05:06.240 --> 0:05:06.720 can bank. 0:05:07.200 --> 0:05:09.680 And so he sort of aggregate up a number. 0:05:09.440 --> 0:05:12.520 Of business people and said, okay, let's put some funds together, 0:05:13.080 --> 0:05:15.560 and they pulled out a person's name out of a 0:05:15.600 --> 0:05:17.719 hat who was looking to have a home loan, and 0:05:17.760 --> 0:05:19.920 they got a home loan with SBS and so that 0:05:20.480 --> 0:05:23.400 mutual status started back there fifty seven years ago. 0:05:23.520 --> 0:05:26.320 Literally like a lotto win for your first mortgage, it was. 0:05:26.760 --> 0:05:28.760 Pull your name out of a ballot and it's lucky 0:05:29.360 --> 0:05:32.359 family that we're in the local community got the funds 0:05:32.400 --> 0:05:33.039 and the way they went. 0:05:33.320 --> 0:05:36.480 I would hope that your methods of credit allocation have improved. 0:05:36.800 --> 0:05:38.560 Yes, it's not just a lot of ticket these days. 0:05:38.600 --> 0:05:42.279 So yeah, obviously all lending, you're really trying to understand 0:05:42.279 --> 0:05:44.200 the context of the borrow what they're trying to achieve. 0:05:44.279 --> 0:05:46.600 And then it always comes down to the three CS, 0:05:46.680 --> 0:05:50.800 so character collateral capacity for them to repay the loan back. 0:05:50.839 --> 0:05:52.040 But it's a lot more than that. 0:05:52.080 --> 0:05:56.080 So we were not just putting leaning decisions into a 0:05:56.080 --> 0:05:58.840 black box. We're actually getting to know the individuals, understand 0:05:58.880 --> 0:06:01.640 their circumstances, and we've got really strong lenders can actually 0:06:01.640 --> 0:06:04.359 make a difference and make that right decision hopefully for 0:06:04.800 --> 0:06:05.200 the member. 0:06:05.560 --> 0:06:07.280 I guess if you've got a strong lender in your 0:06:07.320 --> 0:06:10.920 portfolio or a strong deata in your portfolio and they perform, 0:06:10.960 --> 0:06:13.640 then that lifts the performance of the operation overall. 0:06:13.720 --> 0:06:14.719 Right, yeah, hundred percent. 0:06:14.760 --> 0:06:17.680 So yeah, as I said, because we're owned by our members, 0:06:17.680 --> 0:06:20.400 so as that mutual status, so it's really important that 0:06:20.440 --> 0:06:22.880 we are making the right decisions and the best benefits 0:06:22.920 --> 0:06:26.400 of all of our members. But we've got a strong portfolio. 0:06:26.960 --> 0:06:31.159 Our focus is mainly on home lending. So as I said, 0:06:31.200 --> 0:06:34.320 back in our DNA was pulling that first person's name 0:06:34.360 --> 0:06:36.559 out of the box, and that's still what we're focused 0:06:36.600 --> 0:06:39.360 on today, about helping people. Our purpose about helping people 0:06:39.360 --> 0:06:42.040 find a place to call home. And we believe home 0:06:42.040 --> 0:06:44.720 ownership is great for creating really strong communities and so 0:06:44.800 --> 0:06:46.599 that's where real focus of us in Stall is. 0:06:46.920 --> 0:06:49.920 So and that first home ownership is particularly key for you. 0:06:50.400 --> 0:06:51.160 Really key for us. 0:06:51.200 --> 0:06:54.680 So we're really proud to say that we're being a 0:06:54.839 --> 0:06:56.320 bank of the year, can start a bank of the 0:06:56.360 --> 0:07:00.080 year for first home buyers for four out the last five. 0:07:00.240 --> 0:07:01.119 Years, so that's great. 0:07:01.600 --> 0:07:04.800 Why is that, Well, I guess it's the proposition we 0:07:04.839 --> 0:07:06.960 put to the Market's the care that our team provides 0:07:07.000 --> 0:07:09.120 to those first home buyers. So we've got a really 0:07:09.200 --> 0:07:11.480 really competitive proposition. So if you take out a first 0:07:11.520 --> 0:07:15.000 home loan with Espears, we discount that rate, so we 0:07:15.120 --> 0:07:17.360 give you a help in that first sort of twelve 0:07:17.400 --> 0:07:19.040 months or twenty four months, so you get a discount 0:07:19.080 --> 0:07:21.040 of rate, but we also get your back onto the 0:07:21.080 --> 0:07:23.160 retirement savings because a lot of our fresh home buyers 0:07:23.240 --> 0:07:25.480 draw from the key we savor to help them with 0:07:25.520 --> 0:07:27.600 the deposit, so we get them back onto the retirement 0:07:27.600 --> 0:07:29.680 savings plan, and then we make sure that home is 0:07:29.680 --> 0:07:32.400 protected through We've got an insurance arm to our business 0:07:32.440 --> 0:07:34.360 as well, so we make sure you get the foreign 0:07:34.400 --> 0:07:35.520 general and the home contents. 0:07:35.920 --> 0:07:38.360 So it sounds something like your key focus there is 0:07:38.360 --> 0:07:41.120 those first home lenders. But if I'm putting my money 0:07:41.160 --> 0:07:43.080 in the bank, why why am I putting my money 0:07:43.120 --> 0:07:43.720 in your bank. 0:07:44.080 --> 0:07:44.280 Yeah. 0:07:44.520 --> 0:07:46.040 As you know, banking is all about trusts. 0:07:46.200 --> 0:07:48.320 Yeah, so if you're going to put your life savings 0:07:48.320 --> 0:07:51.440 in with a bank, you need to be comfortable. Yes, 0:07:51.480 --> 0:07:53.160 they've got the right credit rating, the money is going 0:07:53.200 --> 0:07:56.640 to be there when you need it. So from our perspective, 0:07:56.680 --> 0:07:59.800 we're being once again. We provide market leading rates to 0:07:59.800 --> 0:08:03.840 our our depositors, so we offer transactional offering, we offer 0:08:03.920 --> 0:08:06.560 savings accounts, but a lot of our retail funding comes 0:08:06.560 --> 0:08:10.880 through term deposits. And for our investors that going to 0:08:10.920 --> 0:08:13.840 that term deposits, they want seriousnty that the money's going 0:08:13.880 --> 0:08:15.160 to be there when they need it, they know the 0:08:15.240 --> 0:08:18.000 term they putting it in for, and they want confidence 0:08:18.000 --> 0:08:19.680 that they're dealing with an organization. 0:08:20.360 --> 0:08:23.080 So where do you sit in the banking system do 0:08:23.120 --> 0:08:24.080 you think in New Zealand? 0:08:24.320 --> 0:08:25.840 Yeah, we play an important role. 0:08:25.920 --> 0:08:28.640 So as a as a New Zealand owned bank, as 0:08:28.680 --> 0:08:32.160 a customer own bank in this case of mutual I 0:08:32.160 --> 0:08:34.440 think we play a really critical role within the in 0:08:34.440 --> 0:08:37.600 the banking environment. If you look at across New Zealand's 0:08:37.600 --> 0:08:39.760 clearly dominated by the Australian own banks and then you 0:08:39.800 --> 0:08:42.840 have the domestic owned banks so we're in the top 0:08:42.880 --> 0:08:45.400 ten banks, slightly down to two percent of market share. 0:08:45.440 --> 0:08:48.240 But as you said, we're full of really important role 0:08:48.280 --> 0:08:51.320 for people who want to bank bank New Zealand bank 0:08:51.360 --> 0:08:53.880 with a New Zealand own bank that they can own. 0:08:53.920 --> 0:08:56.280 So quite different from a shareholder driven own bank. 0:08:56.600 --> 0:08:59.000 That mutualization that really changes things. 0:08:59.280 --> 0:08:59.959 Yeah, it does, indeed. 0:09:00.200 --> 0:09:04.000 So it gives us the opportunity all our decisions that 0:09:04.040 --> 0:09:06.640 we make, the member comes first, So we're looking at 0:09:06.679 --> 0:09:11.080 the what's best for our member obviously our owners, which 0:09:11.120 --> 0:09:14.040 is quite different from shareholders sort of driven business, which 0:09:14.080 --> 0:09:17.000 is what's what's how can you maximize the shareholder value? 0:09:17.040 --> 0:09:21.320 So enables us to make decisions such are more probably 0:09:21.360 --> 0:09:23.959 long term and the better best interests are members. So 0:09:24.400 --> 0:09:28.320 and that involves in making significant investments and technology, making 0:09:28.360 --> 0:09:31.079 sure we're investing in customer service, and making sure we're 0:09:31.200 --> 0:09:33.800 obviously on top of our regulation regulatory obligations. 0:09:34.600 --> 0:09:36.800 Big banks quite often have a lot of a bit 0:09:36.840 --> 0:09:39.240 of a love hate relationship with the technology there. They 0:09:39.280 --> 0:09:41.439 have huge legacy systems that I want to mess with 0:09:41.520 --> 0:09:45.679 them too much because they underpin their size. Do you 0:09:45.760 --> 0:09:47.160 feel you're a bit more nimble. 0:09:47.120 --> 0:09:47.880 Yeah, one hundred percent. 0:09:48.040 --> 0:09:52.800 So at ESPs, we're making a significant investment in transform 0:09:52.840 --> 0:09:55.199 right now our technology stack at the moment. So we've 0:09:55.200 --> 0:09:58.760 got a program called Future Bank and what that has done. 0:09:58.800 --> 0:10:02.640 We've been able to partner with a company out of 0:10:02.679 --> 0:10:06.000 the UK which has got proven technology and we're bringing 0:10:06.040 --> 0:10:07.000 that to New Zeale. 0:10:07.120 --> 0:10:09.360 So that's engine by Starling. 0:10:09.440 --> 0:10:12.040 So Starting Banks a very successful digital bank in the 0:10:12.160 --> 0:10:14.959 UK over ten years, being born out of by bankers, 0:10:15.360 --> 0:10:18.280 world class technology which we believe will disrupt the New 0:10:18.320 --> 0:10:19.439 zeal market, which is exciting. 0:10:19.720 --> 0:10:21.559 At the same time, you've got some disruptors coming in 0:10:21.640 --> 0:10:25.600 pretty fast. Revolute just got a banking license in Australia. 0:10:25.960 --> 0:10:28.320 You've got a lot of FinTechs, haven't you, that are 0:10:28.520 --> 0:10:31.520 challenging anyone that calls themselves a bank, whether they're big 0:10:31.640 --> 0:10:34.880 or small. Did they have an advantage there that's going 0:10:34.920 --> 0:10:35.560 to be hard to beat. 0:10:36.280 --> 0:10:38.600 So we're in favor of competition. Yeah. 0:10:38.679 --> 0:10:42.120 We think competition will get a better outcome for ultimately 0:10:42.160 --> 0:10:45.840 for consumers and customers. So yeah, so we monitor very 0:10:45.880 --> 0:10:49.040 closely what the FinTechs are doing. FinTechs are different that 0:10:49.120 --> 0:10:51.199 are coming to New Zeale, so they don't have the 0:10:51.280 --> 0:10:53.200 breadth of offering. As I talked about, you know, we're 0:10:53.240 --> 0:10:55.480 in a key we saver business. We're an insurance business. 0:10:55.559 --> 0:10:57.959 We're also a consumer finance as well as banking. 0:10:58.360 --> 0:11:00.400 See you'll need a bunch of apps rather than just one. 0:11:00.520 --> 0:11:03.000 Yeah, we've got that breadth, which is good. But talk 0:11:03.040 --> 0:11:08.720 to each other. And then more importantly is that we've 0:11:08.760 --> 0:11:12.720 been around. We're not just the new boys on the block. 0:11:12.720 --> 0:11:14.440 We've been around for one hundred and fifty seven years. 0:11:14.520 --> 0:11:18.800 We've got we've got real people that sit behind the organization. 0:11:19.000 --> 0:11:21.160 So with a lot of fintech, sure, if you want 0:11:21.200 --> 0:11:23.480 to get hold us somewhere, you can't actually bring up 0:11:23.480 --> 0:11:26.199 a New Zealand contact center basin of the cargo with 0:11:27.040 --> 0:11:29.800 a great team members role they are so yeah, so 0:11:29.880 --> 0:11:31.760 we have aired ability. So I think there's a real 0:11:31.880 --> 0:11:35.720 special place stall for a New Zealand challenger bank, particilarly 0:11:35.720 --> 0:11:37.360 a customer own bank such as Spears. 0:11:38.360 --> 0:11:40.360 The banking rules are going to change, aren't they? One thing, 0:11:40.480 --> 0:11:44.199 the deposit Takers Act. We're on track for a position. 0:11:44.280 --> 0:11:46.920 We're just about anyone who qualifies as a non bank 0:11:46.960 --> 0:11:51.720 deposit taker can call themselves a bank. Does that blur 0:11:51.840 --> 0:11:52.560 the lines a little? 0:11:52.559 --> 0:11:52.640 Bit. 0:11:52.679 --> 0:11:53.680 How does that change things? 0:11:54.080 --> 0:11:57.199 I think it just means that I guess customers or 0:11:57.240 --> 0:11:59.160 members just need to do a bit more due diligence 0:11:59.160 --> 0:12:02.400 because banks are a bit more than the label. Yeah, 0:12:02.520 --> 0:12:05.360 so the changes come in and I think one December 0:12:05.400 --> 0:12:09.200 between twenty twenty eight. So that means any register bank 0:12:09.200 --> 0:12:12.199 at the moment or non bank deposit taker can put 0:12:12.240 --> 0:12:14.480 the label that they are a bank, or they provide 0:12:14.520 --> 0:12:18.000 banking services and so forth. So I just encourage customers 0:12:18.640 --> 0:12:21.360 it's more than just that label. So need to understand 0:12:21.400 --> 0:12:25.320 the credit rating, need to understand the history, you need 0:12:25.360 --> 0:12:28.640 to understand their practices around governance, liquidity, risk management. 0:12:28.760 --> 0:12:31.920 So those things are really important. So it's more than 0:12:31.960 --> 0:12:32.839 just a label on the door. 0:12:33.240 --> 0:12:35.360 The other big innovation really has been that deposit of 0:12:35.400 --> 0:12:38.679 compensation scheme or basically a one hundred thousand guarantee on 0:12:39.360 --> 0:12:43.079 a certain range of deposits. At some institutions. You'd be 0:12:43.120 --> 0:12:43.599 covered by that. 0:12:43.880 --> 0:12:44.320 Yes we are. 0:12:44.440 --> 0:12:46.560 Yeah, a lot of you know what people would call 0:12:46.640 --> 0:12:49.319 finance companies are covered by that. Is that changing the 0:12:49.400 --> 0:12:53.240 game in terms of where capital is going, where customers 0:12:53.280 --> 0:12:55.880 are prepared to go to source funds from and so on. 0:12:56.440 --> 0:12:58.400 Is that putting some competition in the mix. 0:12:58.480 --> 0:13:00.280 It definitely been a positive of element. 0:13:00.360 --> 0:13:03.120 I think clearly we're one of the few jurisdictions who 0:13:03.160 --> 0:13:05.800 didn't have a guaranteed scheme, so that when that came 0:13:05.840 --> 0:13:08.839 in in place in July twenty twenty five, So this 0:13:09.000 --> 0:13:12.880 last year we've seen more people ask about that. We've 0:13:12.920 --> 0:13:16.560 seen some of our investors would start splitting their funds 0:13:16.600 --> 0:13:21.240 across multiple deposit takers. But for a lot of a 0:13:21.280 --> 0:13:24.920 lot of our loyal, sophisticated members are very comfortable with 0:13:24.960 --> 0:13:29.040 our credit rating, very comforful with our history. We've been there, 0:13:29.080 --> 0:13:31.160 we've been able to support them. So hasn't changed a 0:13:31.200 --> 0:13:33.440 lot of the flows for some of the non bank 0:13:33.480 --> 0:13:36.040 deposit takers. Yes, they may have picked up a bit 0:13:36.080 --> 0:13:38.559 more funding, but we haven't seen a market difference in ourselves, 0:13:38.600 --> 0:13:40.760 so I think it just should just give more confidence. 0:13:41.880 --> 0:13:44.400 It's another layer of confidence for customers and members to 0:13:44.520 --> 0:13:45.080 invest with us. 0:13:48.120 --> 0:13:50.319 Once you get away from the big four banks, there's 0:13:50.360 --> 0:13:53.920 a range of non bank deposit takers to consider. So 0:13:54.080 --> 0:13:57.480 I spoke to Brent King, the managing director of General Capital. 0:13:57.520 --> 0:14:01.000 They're a listed specialist lender about what they do. 0:14:02.120 --> 0:14:05.480 So we're a financial Services Group. We'll listit on ins 0:14:05.520 --> 0:14:10.400 and X. We have about seventy seventeen hundred shareholders, so 0:14:10.520 --> 0:14:15.560 we've got shareholders around the country. We have totals it's 0:14:15.600 --> 0:14:17.840 for about two hundred and eighty million dollars. 0:14:18.600 --> 0:14:21.200 What is it that you do? How do you make 0:14:21.280 --> 0:14:23.760 money and contribute economic value? 0:14:24.680 --> 0:14:28.280 Good question. The real key is money is money, and 0:14:28.400 --> 0:14:31.440 so all of us we borrow money and we lend money. 0:14:31.560 --> 0:14:34.360 So that's every bank, that's every finance company, that's any 0:14:34.560 --> 0:14:37.880 building society, so all of those, all of us pretty 0:14:37.960 --> 0:14:40.440 much do the same thing. The only question is what 0:14:40.600 --> 0:14:43.520 security will we take? So what will I lend it 0:14:43.880 --> 0:14:46.560 to you to do and what security can you give 0:14:46.640 --> 0:14:49.320 me back? So we're very much like our big bank 0:14:49.640 --> 0:14:51.640 or a smaller finance business. 0:14:52.720 --> 0:14:53.720 You cover that full range. 0:14:53.760 --> 0:14:56.480 To be honest, yes, we can offer you those full services. 0:14:56.560 --> 0:14:59.440 We can finance your car, we can finance your house, 0:15:00.080 --> 0:15:02.600 we can finance construction, we can do most. 0:15:02.520 --> 0:15:05.960 Things non bank deposit taker. It's a very kind of 0:15:06.000 --> 0:15:07.760 clumsy term. You're going to be able to call yourselves 0:15:07.760 --> 0:15:09.480 a bank soon apparently, though, should you? 0:15:10.080 --> 0:15:13.760 Yes, we should be and we will be. So the 0:15:13.840 --> 0:15:15.920 real care is it's funny to have a name which 0:15:15.960 --> 0:15:18.000 has the word non in it. It's sort of we're 0:15:18.040 --> 0:15:20.640 telling you what we're not. It's a term that's become 0:15:20.760 --> 0:15:24.680 too negative, too weird. We're not a bank. That's a 0:15:24.760 --> 0:15:25.520 weird thing to say. 0:15:25.640 --> 0:15:27.480 So will you call yourselves a bank? 0:15:28.840 --> 0:15:29.080 Well? 0:15:29.400 --> 0:15:31.200 I'm not sure I should be saying this, but I'd 0:15:31.520 --> 0:15:34.040 certainly been saying it to my directors. I like us 0:15:34.160 --> 0:15:36.160 changing the name to use the word bank, and I 0:15:36.240 --> 0:15:38.760 thought we could use my surname king and so we 0:15:38.880 --> 0:15:41.400 could call it the King's Bank, And I think that works. 0:15:41.440 --> 0:15:44.800 Well, it's not going to happen, but yeah, first, if 0:15:44.840 --> 0:15:48.000 it does, that's a bold move. So I guess if 0:15:48.000 --> 0:15:50.120 you look at it from three perspectives of the investor, 0:15:50.320 --> 0:15:55.200 of the person requiring just ordinary transaction services, and the 0:15:55.280 --> 0:15:57.960 person who's a you know, potential debtor who's seeking I mean, 0:15:58.200 --> 0:16:00.240 why would they be walking through your or. 0:16:01.840 --> 0:16:05.280 Our rates are competitive? So if you're a person with 0:16:05.760 --> 0:16:08.360 funds in the bank, why wouldn't you put them with us? 0:16:08.520 --> 0:16:11.120 Your interest rate will be higher, plus you'll be and 0:16:11.200 --> 0:16:15.120 you're guaranteed now right, supported by the deposit compensation scheme. 0:16:15.360 --> 0:16:16.280 Has that changed things? 0:16:16.320 --> 0:16:19.720 Having Yes, it's certainly given us a lot more credibility. 0:16:20.440 --> 0:16:22.360 We've had that all the way through where we've had 0:16:22.880 --> 0:16:25.080 our credit rating. So you go and have a look 0:16:25.080 --> 0:16:28.240 at our credit rating, look it up against other people. 0:16:28.480 --> 0:16:30.760 Lots of people who try and compete with us, they 0:16:30.800 --> 0:16:33.920 don't have a credit rating, so they're not independently reviewed 0:16:33.960 --> 0:16:37.080 on that. So for us as a concept, this is 0:16:37.160 --> 0:16:41.800 a continuation of our journey to say, hey we respectable 0:16:42.080 --> 0:16:46.120 and well supported business, and everybody is in risk even 0:16:46.240 --> 0:16:49.520 under if you look at internationally, when you have a 0:16:49.640 --> 0:16:54.240 GFC global financial crisis, everybody gets hurt and so we 0:16:54.400 --> 0:16:57.080 forget how much the bank's last in two thousand and eight. 0:16:57.440 --> 0:17:01.280 But you seem to have managed to come through that period. 0:17:01.400 --> 0:17:01.640 Vine. 0:17:02.000 --> 0:17:04.080 One of the things that people often say is, hey, 0:17:04.160 --> 0:17:08.200 you hold too much cash. So that's our insurance that's there. 0:17:08.359 --> 0:17:10.680 We have cash in the bank and so today we'll 0:17:10.720 --> 0:17:13.800 certainly have forty five to fifty million dollars sitting there 0:17:13.840 --> 0:17:16.320 that if somebody needs their money back, we can repay 0:17:16.400 --> 0:17:16.800 that money. 0:17:17.280 --> 0:17:19.600 Wow, that's I mean, that's in an error where we're 0:17:19.640 --> 0:17:22.040 hearing sort of these big private credit firms sort of 0:17:22.160 --> 0:17:27.120 gating there withdrawals and you know, holding onto people's money 0:17:27.600 --> 0:17:30.520 at the top end of the spectrum, that's pretty remarkable. 0:17:30.720 --> 0:17:34.800 And most of those are fully lent, so they don't 0:17:34.840 --> 0:17:37.919 have the cash sitting in the bank. So the criticism 0:17:38.080 --> 0:17:40.040 of me as I carried to your money cash, I 0:17:40.280 --> 0:17:43.000 say no, no, no, that's your safety. The only thing 0:17:43.119 --> 0:17:45.480 is to have cash when you need to have cash. 0:17:46.560 --> 0:17:49.880 What place do you think you occupy in the landscape? 0:17:52.080 --> 0:17:54.960 Like anything your boutique, you've got to be niche, you've 0:17:54.960 --> 0:17:57.440 got to have something different that you do, and that's 0:17:57.560 --> 0:18:01.520 mainly about your people being better at what they're doing. 0:18:02.000 --> 0:18:05.160 So for us, a dollar from us or a dollar 0:18:05.200 --> 0:18:07.680 from the bend Ze doesn't matter to you. The costs 0:18:07.680 --> 0:18:10.680 will be slightly different, but that's it. So we've got 0:18:10.680 --> 0:18:12.960 to be better at looking after what you need. And 0:18:13.040 --> 0:18:16.320 if we can't service you, we will tell you I'm sorry, 0:18:16.720 --> 0:18:19.760 I can't approve that loan. I'm sorry. So we give 0:18:19.800 --> 0:18:22.320 you a quick yes or a quick no. We don't 0:18:22.359 --> 0:18:24.520 make you around. Our key is to be better at 0:18:24.560 --> 0:18:25.200 doing our job. 0:18:25.520 --> 0:18:26.880 Is it easy to lend money. 0:18:27.240 --> 0:18:29.600 Yes, easier to lend money, hard to get it back 0:18:31.359 --> 0:18:34.280 as that, particularly when you're in a pretty soggy economy 0:18:34.440 --> 0:18:36.960 like this. We've got to make sure that we know 0:18:37.280 --> 0:18:39.080 what their commitment is going to be and what they 0:18:39.119 --> 0:18:39.760 can afford. 0:18:40.240 --> 0:18:44.680 If we're loosening the rules around which institutions can refer 0:18:44.760 --> 0:18:48.000 to themselves as a bank, does that post some risks 0:18:48.080 --> 0:18:49.920 for the customers for the system. 0:18:49.920 --> 0:18:53.119 Yeah, I'm sure it will, because there'll be perception in 0:18:53.240 --> 0:18:58.240 the same way that you've got points on your credit card, 0:18:58.480 --> 0:18:59.879 you're going to get the same we're going to get 0:18:59.880 --> 0:19:02.440 it toasted with an account opened or something like that 0:19:02.600 --> 0:19:07.399 around and so that will blur people's hard, cold decision making. 0:19:07.840 --> 0:19:10.200 And you see that in the States where you've got 0:19:10.320 --> 0:19:12.920 incentives to open an account and put some more money 0:19:12.960 --> 0:19:15.400 in to do that, that is going to get more 0:19:15.880 --> 0:19:18.840 There'll be more product, but there'll be more tricky things 0:19:18.920 --> 0:19:21.800 that you could win a trip to Fiji or whatever 0:19:21.840 --> 0:19:25.000 it might be. We've seen that with lending. So I 0:19:25.040 --> 0:19:28.040 think we'll just get more intensity on the sales process, 0:19:28.200 --> 0:19:29.480 on the advertising process. 0:19:31.040 --> 0:19:32.280 That's competition though, isn't it. 0:19:33.160 --> 0:19:36.600