CEO explains the fintech forces reshaping NAB
The emergence of fintech has fundamentally changed National Australia Bank's strategy and the thinking of its chief executive, Andrew Thorburn.
He's deploying more start-up lingo, and said last week the nation's largest business lender is no longer benchmarking its performance against its rival banks, but rather technology players.
Thorburn and his newish tech chief, Patrick Wright, who was previously with Barclays in the United States, went to Seattle and Silicon Valley last month and met with Amazon, Microsoft and Google for some inspiration.
Like the tech giants themselves, NAB is pumping up technology spending with sums that would make wannabe disrupters salivate.
With a plethora of start-ups nipping at NAB's heels to offer online loans to businesses – the growing list includes Prospa, Moula, Kikka, OnDeck, Spotcap, Get Capital, CreditSME, Banjo, Sail, Apositive, RateSetter, Bigstone, ThinCat, InvoiceX, Waddle, FundX and Timelio – NAB is investing an additional $1.5 billion over the next three years on technology to sharpen up its digital offering.
This is on top of the $3 billion already earmarked for the same period.
Responding to disruption
NAB told analysts last Thursday its unsecured business lending origination vehicle, known as QuickBiz, is now assessing one-third of its new small business loans and has been extended to applications for equipment finance.
NAB created QuickBiz to respond to the disrupters; like the fintechs, it uses a much wider set of data sources for credit analytics, and makes faster decisions.
The time to open a new NAB business account had been reduced to less than 30 minutes, compared to several days previously.
NAB is also trying to ensure that the banking royal commission doesn't slow it down. Thorburn sent a clear message last week that he doesn't want the Hayne inquiry to open the door to the fintechs by tripping up NAB in excessive risk-aversion.
"Ultimately, we can't take a lot longer in order to comply with everything, because I think in the end, we will get outcompeted by others who can get into that gap better – like fintech players, with simpler banking platforms and simpler products who can still comply with all the laws they need to," he told me last week.
Under Wright, NAB has been migrating more services to the cloud alongside Amazon Web Services, and is investing in 'microservices' and application programming interfaces (APIs).
Thorburn says these will improve speed to market and allow for the reusability of code, positioning it for the new world of "open banking".
But to execute all of this – and to turn rhetoric into action – NAB will need plenty of new skills. And given all the scrutiny on the banking sector that has seen its reputation battered by the royal commission, one of Thorburn's and Wright's biggest challenges could be encouraging digital-savvy staff to leave tech firms and join a bank.
NAB said six months ago it needed 2000 new staff with digital skills. It said last week it has only hired 93 of them.
So NAB is still looking for another 1907 people over the next couple of years to join Thorburn on his mission to fend off the start-up threat. That's a number that represents around 20 per cent of the entire fintech workforce in Australia.