1. A new normal: How economics, financial services and social cohesion are evolving
If this had been an in-person event there would have been a ripple through the audience as Brett King spoke — “don’t get me wrong, I’m not a socialist”.
It’s tough to discuss the challenges the world is facing today and Brett’s possible solutions without sounding a little socialist — traditional capitalism and the free market are just not part of the answers.
“A lot of challenges are emerging, economically and otherwise,” Brett told us. “But what are the lessons from history?”
King discussed the changes seen after the black plague in Europe — including improved living standards off the back of higher rates of pay for in-demand labourers, and pushes to change urban architecture — and after the Spanish flu — national healthcare programs and the idea of the hospital as similar to wartime field hospitals rather than palliative care or long-term convalescence.
Today, King said, we’re seeing a correlation between a health crisis and an increase in the number of protests in US cities, driven by inequality, economic uncertainty and general uncertainty about the future.
In the past 50 years we’ve seen a dramatic increase in the gap between the rich and the poor — King points to this as a stressor, as well as pointing out that COVID has impacted on those in lower to middle income brackets more than it has on wealthy people.
Housing anxiety and food anxiety is increasing in the pandemic — but over the past 30 years homelessness had already been increasing, despite strong (outside the GFC) economic growth.
This is counterintuitive to the way capitalism is supposed to work. The pandemic has introduced stressors, but capitalism has not provided a safety net — in that sense, capitalism has failed us. A different form of incentivisation for markets, King hypothesised, may have led to an adequate stockpile of PPE, for example.
“The market is not incentivised to mitigate social problems.”
This problem goes beyond this current pandemic. We’re facing uncertainty, and we’re facing economic and social impacts of future pandemics, increased automation and climate change. So we must start planning to prioritise the wellbeing of humankind — we can no longer leave that to the free market.
The classic supply and demand curve that underlies modern economics — demand increase causing supply increase, therefore an increased need for and valuation of labour — might no longer apply.
The market rewards companies for growth, not for employing people, and this is a fundamental design problem of traditional capitalism.
King finished his address with what he called ‘the simple truth’: “If we want an inclusive and abundant future, it is one we must work for and plan for. Leaving it to the free market has not worked.”
2. “Every tech project is a change management project”
Around 1000 brokers, shopfronts all around the country, an enormous share of the intermediated loan market, and a founder that’s become a household name. Aussie has one really simple purpose, said Chief Digital Officer Rainer Rhedey: putting financial growth in reach of more Australians. And a straightforward goal — make it simple.
In conversation with our Australian VP of Solution Engineering Di Terry, Rhedey shared the reason his role was created six months ago — “customers are evolving”. That evolution has driven demand for digital solutions for both brokers and customers.
“We now have a broker network that’s pumped up, passionate, excited.”
The recent edocs initiative, rolled out in February, has allowed brokers to become paperless and submit and track applications from their offices, their cars, their customers’ dining tables, and has provided visibility to the broker and customer. With just more than 16,000 applications having been submitted using the tool, it has given well over 20,000 hours back to brokers — time they can spend with customers.
This means one big hurdle of any tech project is covered — user buy-in for the change. Brokers, Rhedey said, are engaged and excited to be part of the next part of the journey, which is creating a web experience that helps customers start dreaming and planning for themselves.
3. “Great CX involves every part of the business”
There’s a pretty short window to grab the attention of a potential borrower, Athena Home Loans Chief Experience Officer Esse Spadavecchia told our Director of Financial Services Strategy Stuart Ward.
Spadavecchia spoke of the importance of internal teams being tooled for 100 per cent customer-centricity so they can provide excellent customer experience (CX). This means seeing the value of data beyond lead generation from the first interaction.
With integrated customer database, product ledger and communications platforms, the Athena team can see applications in real time.
“In that short window a customer is interested in applying for a mortgage, we can communicate,” Spadavecchia said. “We can also see how people are interacting with the platform, where they are getting stuck, and help them with that.”
“If we put together the CX with string and sticky tape we don’t enable people to do their best work.”
“From the beginning we’ve sought to involve our customers and our whole team in the design process,” said Lead Experience Designer Tim Walter. “We’ve had so many more ideas than we could have come up with on our own. We’ve had the opportunity to validate those ideas and make sure they’re going to work for people, and to iterate on these ideas as well.”
Walter told us that great CX is about more than creating delight — it’s balancing all areas of the business to deliver, as well as employee experience.
“Organisations are very savvy when it comes to recognising the value of a great CX, but often EX suffers. If we put together the CX with string and sticky tape we don’t enable people to do their best work.”
4. “It’s everybody’s business to work out how we create a financially inclusive society”
“A single life event can push people into or further into financial hardship, and once they’re there, they face significant challenges climbing back out,” said Heather Saunders, Head of the Financial Inclusion Action Plan (FIAP) Program at Good Shepherd. “Unfortunately now is one of those times for millions of Australians who have never had to navigate systems related to debt or the social support system.”
Before COVID, Saunders said, just half of Australians had savings that would sustain them for three months.
“COVID will redesign the way we think of vulnerability. Events out of our control can affect all of us. We know that people facing financial hardship — who are excluded financially — will struggle to withstand a financial shock. They can’t access finance and are at risk of debt traps.”
Under the FIAP program Saunders heads up, community services organisation Good Shepherd partners with 40 organisations, including from banking, utilities and education providers. The FIAP framework is based on global research, and has supported the development of affordable products, fairer payment terms to support low-income customers, employees’ financial strength, and training.
“The $20,000 to survive this year will cost them hundreds of thousands of dollars as they prepare to retire. I hope that we’ll be more empathetic and we will as a society prioritise supporting those who have been affected”
Saunders advocates for a response to vulnerability with an active listening approach and by making use of data and analytics.
“We’ve changed the way we talk with customers,” said Elliot Anderson, Head of Financial Health and Resilience, Social Impact at NAB, explaining big changes to what had traditionally been NAB’s collections department as part of NAB’s participation in the FIAP program. Aside from looking at solutions to financial distress, the team looks at broader support that might help.
“We know money isn’t a single part of someone’s life that can be cut out and separated. Financial shock will have ramifications in a number of areas so how can we provide that support?” Anderson said. “And that program, while providing a great experience and improving outcomes for customers — helping them get back up on their feet more quickly — actually has provided a significant positive boost to our bottom line, saving $80 million a year in that business unit.”
So what should the new normal for financial services look like? Brett King says the free market does not provide resilience. Elliot Anderson’s $80m a year says it could be part of the solution.
“I don’t want to go back to the old normal — it didn’t work for so many Australians. I want to see more organisations step up and play a role in financial stability,” said Saunders. “It’s everybody’s business to work out how we create a financially inclusive society.”
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