Chapter 1: What challenges did Anthony Miller face when taking over Westpac?
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Anthony Miller was made chief executive of Westpac at the end of 2024, four years after he joined the bank as head of its institutional division following a 20-year career in investment banking, mostly with Goldman Sachs, but also Deutsche Bank. He took over at the tail end of a horrendous period for Australian banking, and especially Westpac,
which had been sued for allowing money laundering that contributed to terrorism and child exploitation. And before that, there was the Hayne Royal Commission, from which Westpac emerged as tarnished as any of the banks. And if that was the frying pan, now there's the fire. AI, cybersecurity, and the Iran war.
Now I spoke to Anthony Miller here in the studio, but that's unusual for That's Business because we'll mostly do these interviews remotely. So we can bring you anyone, anywhere. Hello, Anthony Miller. Thanks for joining That's Business.
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Chapter 2: How did the AUSTRAC settlement impact Westpac's operations?
Pleasure to be here, Alan. Thank you for having me. Now, when you joined Westpac as head of the institutional bank in October 2020, the $1.3 billion settlement with AUSTRAC had just been announced. And that was for the money laundering, terrorism and child exploitation issue. financing civil case that they'd launched a year earlier. Now, what was the mood at Westpac like then?
I mean, they were horrendous charges. So what did you walk into?
I walked into a company that was very sombre, or traumatised might be another way to describe it, because what sort of stands out about Westpac since I've been there is how much affection the team, the employees have for the company. And so to be accused and to be found guilty.
But did they lose affection as a result of that? Was there some kind of anger among the staff?
Oh, real disappointment about how did we find ourselves in this position. So that therefore set it up for the challenge that was ahead, which is to change the way we did things and ensure that we met a standard in terms of how we ran the company that
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Chapter 3: What changes has Westpac implemented to improve its reputation?
meant that would never happen again. And that's been that real commitment that everyone had, which is we just cannot let this happen again, so let's change the way we do things. And so people reacted in the right way, albeit it was really, really challenging in those first year or two.
Yeah, so obviously during that time the bank had a good hard look at itself, made some changes, which you then inherited when you took over a few years later as CEO. And did what happened with Austrac make it easier for you to make changes that you wanted to make?
I think what happened with AUSTRAC certainly meant that we had to change and everyone recognised that. And so there was a four-year program of work to change the way we did things. And, you know, they were peddicking some outstanding leadership in getting us through that. And I was fortunate enough to take over as Chief Executive at the tail end of that process.
And it's definitely the case that we learnt from that particular challenge.
So that OzTrack thing was really the cherry on the top of the Hayne Royal Commission process that had come earlier. And Westpac didn't come out of that very well either. I mean, there was lots of, all sorts of bad behaviour were revealed.
along with the rest of the industry, we certainly got found out in the context of what was brought about, you know, revealed by the Royal Commission. And so, yeah, that was a combination of, you know, three or four very difficult years for Westpac.
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Chapter 4: How is Westpac addressing the risk of recession for its customers?
And as I said, the pride that people had in the company, they were so heartbroken that the company had not met the standards people expected, as identified in the Royal Commission, as identified by Austrac. So that certainly gave us the, you know, galvanised the workforce to really let's change the way we do things. And
So was that, I mean, obviously it was a turning point for the industry, but how do you reflect on that now?
Well, it certainly, I would never wish it on anyone, but to the extent that you have a challenge set or a crisis thrown upon you, not letting it go to waste was, I think, what we've done and what the team at Westpac has done, which is we fundamentally changed the way we run the company, the way we operate things, the way we go about things, the way we manage risk.
And so I think we're in a much better place than where we were, albeit you would wish that we could have identified that and realised that well before. The Royal Commission will before any Austrac.
Is banking as good a business as it used to be? And as good a business as the share market thinks it is? Because the share prices of Westpac and in particular Commonwealth Bank are really high. And it's not just the Royal Commission and what came out of that that's changed, but the extra competition and in particular mortgage brokers.
Have they changed the business model of banking to the point where it's not as good as it used to be?
I think, well, certainly being a bank in Australia is still a privileged position. There's no doubt about it. Having a banking licence is a real privilege and a bank run well can make a reasonably attractive, sustainable return for its shareholders.
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Chapter 5: What role does AI play in Westpac's future strategy?
But there's no doubt that the competitive environment, and you call that one really good example, which is in the mortgage business with brokers and the way they are now servicing their customers, has changed the economics of the business. But that's the consequence of good competition. That's the consequence of, you know, the environment we're in.
And so it's sort of like cry me a river to worry about what it was and, more importantly, what should it be.
And what we've got to get focused on and what we are focused on is how do we become the best customer-orientated bank, the best customer-orientated company in the country, and in doing that justify the opportunity to charge interest rates, charge fees and deliver product and service to our customers and make a return we need to.
Well, speaking of customer orientation, you're in Melbourne to open a new branch in Leangatha. Yeah. Right? Which is a rare event. So obviously worth, you reckon, making a bit of a PR fuss about.
Well, we're certainly making a big effort to get our positioning in regional Australia right. And one of the things that I acknowledge and we acknowledge at Westpac is that we got that delivery of service into regional Australia wrong. We did close a few too many branches. And so, for example, we reopened Moree last year and we're now tomorrow announcing
and visiting Leangatha and we're reopening the branch in Leangatha tomorrow.
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Chapter 6: How is Westpac planning to improve housing affordability?
So it's part of sort of getting that service proposition right in regional Australia. We did pull back a little bit too much and we're going to change it.
But the trend of branches is down. I mean, people aren't using cash anymore. They don't need as many branches. So you've changed it. You would have closed a lot of branches since you became CEO, right?
Not close to any branches in regional Australia. We continue to work on what's the right model in metropolitan Australia because 96% of what Australians do or what customers do with Westpac is digital or online. So that's a very significant change in how they think about and use their bank in terms of services and products.
But it is the case that there is a role still for that point of presence in community. And that's something that we think we can and should be able to get right. And what it will do is just takes, I suppose, investment, time and effort to see what's the right way to deliver that service proposition in the community.
And what people want is they want to see this transition between something that's person to person, Something that might be virtual, so over the call centre, or something that might be digital and online.
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Chapter 7: What measures is Westpac taking to enhance cybersecurity?
And so how do we package that three ways of servicing the customer and get that right in all the areas and all the markets that we want to participate in?
Yeah, right. Speaking of cash, I understand there's like a billion $50 notes in circulation, which is more than any other note combined. Yeah. Right? So obviously that's about tax avoidance and money laundering. people are just hoarding the things, right? So do you think there's a case for banks being told to limit how many of them they give out?
Well, I think that's really a decision or a responsibility or something that I think falls to regulator. Yeah, of course.
But are you kind of a little bit troubled by it?
Well, certainly, I mean, some of the stats that I've seen and have shared with me by the regulators, you know, close to half of cash payments have some connection or causation or correlation with criminal activity or tax avoidance. So therefore, that is a big problem for Australia.
But there is rules and there are disciplines and there are regulations we follow, which hopefully help mitigate some of those risks.
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Chapter 8: How is Westpac adapting to changes in customer banking preferences?
The fact is, is that the community still wants to use cash. And so therefore, that's part of our social responsibility. Social function is to store cash and then give people cash when they need it. What I would say is the cash transit and storage industry has to fundamentally change because it's premised on a model where you had most of what people did was with cash.
Now, less than 7% of payments are via cash. And so, therefore, that economic model has to change. And that's what we're also working on as an industry is how do we make that more efficient?
And what about cybersecurity? I mean, that's at the forefront of a lot of customers' minds, I think. How many attacks do you fend off each day?
An enormous number of attacks. That's the entire banking industry. That's Australia, frankly. And so people should recognise, and I think many do, is that this is an ongoing challenge globally, which is cyber war, cyber attack. And so that is a challenge for us. We've spent... you know, over half a billion dollars last year on cyber fraud and scams mitigation and prevention.
And it just highlights that, you know, in this digital banking age, there's lots of advantages and attraction to digital banking services, but it does come with challenges around managing scams, frauds and cyber challenges.
And what I would say is that, you know, Australia, Australian banks working with the Australian government do work really well in holding the line and protecting Australia against that cyber threat.
How do you decide whether to compensate somebody who's been scammed or not?
And so that's part of the work that's ongoing actually. And one of the foundations is who is responsible or who could have done more to ensure that person was not scammed. And one of the things that I want to acknowledge with the current government is the work they've done in creating a new framework for how we manage scams and frauds in Australia.
And in particular, what they've worked on, and we've advocated strongly for this, is that the banks, together with the telcos, together with the social media platforms, are one entire ecosystem that need to work collectively together to stop... minimise and deal with scams.
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