Banking Review

Kiwbank’s straight shooter

CEO Paul Brock says Kiwibank’s business is all about making everything
straightforward and as easy as possible for the demanding customer

BY CHARIS PALMER

Kiwibank chief executive Paul Brock has been in the role for a little more than six months, but he’s already overseen some major initiatives. We caught up with Brock to discuss the world of state-owned banks, account switching and innovation in financial services.

RBR: You were part of the original team that helped build and launch Kiwibank – what attracted you to the bank in the first place?

PB: Sam Knowles and I had worked together previously. So we came across at the same time to do the strategy work on how the New Zealand Post board could enter the banking market.

The rest is history as we pulled a small team together. I was one of the co-founders and, of course, there was a support network needed outside of just the two of us but it was the early days of a small team coming together to think about how we could enter the banking market.

RBR: New Zealand is going through tough times at the moment – how hard will the bank be affected by the recent Christchurch earthquake?

PB: It’s a bit early to tell at this point. Certainly, our thoughts are all with the people of Canterbury – it’s a very, very challenging time and it will have an impact on the economy overall, I think. Everyone, including the Reserve Bank, is certainly contemplating the economic impact of the earthquake.

Undoubtedly, the situation with every bank is that there will be people who have insurance, and, as we found in the last earthquake, there’s always some people that don’t have insurance. That’s the immediate impact, which is normally reasonably small, but the more material impact is on the Canterbury region and that’s really uncertain to know.

It depends on the amount of government support, the extent and timeframe to repair and rebuild, and probably also the long-term aspect of people’s commitment to live in a place like Canterbury.

All of those things are important to us as we think about how do we stand by the people of Canterbury, as we have a very strong representation down there.

RBR: It was recently reported Kiwibank is exploring a new international banking platform – do you have an ambition to play more seriously in global remittances and international payments?

PB: We’re already doing quite a lot in the international space. We have a partnership with Citibank currently, which enables Kiwibank to access the globe and offer white labelled banking products effectively, and we’ve recently set up a foreign exchange business where we’re effectively providing foreign exchange to importers and exporters and obviously that’s a key part of the New Zealand economy.

That’s probably the key area there and, in terms of payments and remittances, we have the top 50 billers in the country that do over the counter payments with us domestically and that’s a very important part of our business. While we have that business, obviously we continue to innovate and look at new ways of doing payments for both businesses and consumers, so innovation will still play a part in that part of the business.

RBR: We’re having a debate and investigation of account number portability here in Australia. You’ve spoken out in favour of it. Do you think it will ever become a reality in the region?

PB: I think account number portability’s a challenging subject but sometimes you have to challenge people to think differently to really encourage true competition in the marketplace.

I don’t say that in a sense of just the idea; it’s more about it being easy for people to change banks and, if it’s not, then we need as an industry to work together to make sure it is easy for people to change banks.

In New Zealand, we have been doing that recently as an industry and we’ve had really interesting experiences and good experiences in relation to agreeing a new code amongst the banks as to how the customer changes banks.

So today, instead of having to change all your bill payments across a number of billers and then it all gets too hard, what you can do today if you’re moving to Kiwibank is advise Kiwibank of your old bank account number and Kiwibank would then advise and work with the old bank to change over all those payments. No longer do we have to work with all of the payments industry to switch the payments across because there are simple protocols that mean we should have the whole thing switched over within five working days.

That’s at its early stages in New Zealand, it’s only really just been adopted in December, but certainly it’s getting customer uptake and it’s a good opportunity for people to have it made a lot easier to change providers.

That all encourages us to do a better job, because often it’s not about people joining banks, it’s actually about them leaving them when they have poor service. Our job as service companies is to really make sure we do a fantastic job of serving customers.

RBR:  Being state-owned brings its fair share of politics to your business. What’s your approach to managing this?

PB: The way the SOE model works is state-owned enterprises have a statement of corporate intent that’s agreed early on in the spectrum of planning with government and then, outside of that, we have our own commercial board that operates separately, which it has to under the Reserve Bank environment. We run in the normal way where you agree strategy with the board and get on with it.

There’s often a lot more read into it, but if you study the SOE model, they are businesses in their own right and they stand out and make a difference in the markets they operate in and that’s exactly what we’re doing.

RBR: There was speculation Australia Post would follow Kiwibank’s lead and enter the financial services market in Australia. Why do you think this hasn’t happened, and what advice would you give Australia Post’s Ahmed Fahour as he looks to expand the banking services the group offers?

PB: I think every banking market is different and you need to, when you’re entering markets, make sure there’s an opportunity to be the challenger in that space, and if there aren’t those opportunities, then it makes it pretty difficult.

Generally, when we look at markets in banking around the world we look at if there are strong incumbents; it comes down to how satisfied the customers are at the end of the day.

I wouldn’t like to give any advice publicly!

RBR:  New Zealand is pressing ahead with its iGovt scheme – how much of an affect will this have on your business and can you envisage it being used for online banking and online authentication in the near future?

PB: I think it will have a significant impact on not just our business but all banking and financial services companies and probably also across any service company that’s working with customers and the population.

Identity is a key issue – it’s an issue not only for accessing government in a more simplistic way and a more compelling way, it’s also a key issue for business.

The key issue for business is, of course, making sure we know who we’re dealing with. Banks have been grappling with this issue for a long time, so we’ve tried everything. At the end of the day, I think it’s an incredibly important issue, not just in New Zealand but also globally and identity (management) will be a way forward. I think it will have a big impact and potentially result in a lot of opportunities for people to do business in a far more straightforward way, in a way that customers are looking to do business with them.

Today, a lot of the identity processes that businesses have to go through in relation to clients puts real hurdles in the way of making it straightforward for customers.

So I think there’s a significant opportunity there. The iGovt opportunity perhaps started out in government, but, at the end of the day, will have big benefits to commerce and the way companies do business.

RBR: Do you believe the pace of development and innovation we’re seeing in mobile devices and tablets is putting pressure on banks to improve customer interfaces and experiences?

PB: For a start, I think Kiwibank’s very existence is about innovation and we’re always looking for ways to innovate on the customer experience.

In the case of mobile technology, it’s moving at a dramatic pace and every business has to change to move with that if it’s to remain relevant with customers.

In our case, I think it’s incredibly important.

I think we live in an instant-gratification world and customers, if anything, are actually raising the bar daily, and the sort of devices we have in front of us now are challenging us to think differently.