Good morning, and thank you for the opportunity to appear today. We welcome and look forward to the discussion.
Australia’s economy is fundamentally sound, despite challenges and global uncertainty.
Households and businesses have experienced extreme shocks in recent years – lockdowns, a demand surge, inflation, and rapid interest rate rises.
Many of our customers are finding it difficult to deal with the higher cost of living.
In the past year, we have deliberately and proactively contacted customers, and have initiated 132,000 tailored payment arrangements to those most in need.
As you know, the effect of monetary policy is unevenly felt across the country, with different experiences for borrowers and depositors.
Our insights tell us that, in aggregate, households are spending more on essentials and are cutting back on discretionary spend.
We can also see that savings are being depleted, particularly by working families.
Younger Australians, who tend to have lower incomes and smaller savings buffers, are the most sensitive to these changes in prices.
Those aged 35 to 44 have the highest share of mortgage balances and are most exposed to higher interest rates.
In providing this support to customers we have sought to engage them through their preferred channels – many through Netbank or the CommBank app, but others through more traditional channels like our contact centres and branches.
We are proud to maintain Australia’s largest branch network, and more than twice as many ATMs as any other bank.
CBA has committed to keeping all of our regional branches open until at least the end of 2026.
Last financial year we invested over $80 million to improve our branches, and $800 million to operate our branch and ATM network.
We also distribute around $4 billion in cash each month through our network and the country.
Cash is important for many customers and we’re committed to ensuring a reliable and efficient distribution of cash to communities.
As part of that commitment, you may have heard that the ABA, major banks and major retailers have reached an agreement with Armaguard to provide a 12 month financial contribution towards its Cash-in-Transit business.
The agreement will see Armaguard receive approximately $50 million in additional financial assistance over the next 12 months, subject to meeting monthly key performance indicators and other conditions.
Our branch and ATM network is also complemented by our partnership with Australia Post, which dates back more than a century and is in place until at least 2032.
We will continue to constructively engage across industry and government to find a long-term sustainable solution to maintain cash and physical services in communities.
While sustaining these services is important, these challenges have been brought about by rapid changes in the way customers engage with their bank, and the way they pay for goods and services.
Whatever means of payment is used there is a cost involved, whether that be the physical cost of moving and counting cash, or the investment required in building the New Payments Platform.
Some of those costs are more visible to consumers than others, and some of those costs are more fairly distributed than others.
Recently released research by Boston Consulting compares the direct and indirect cost of cash versus card payments in Australia.
According to this research, cash payments cost merchants approximately 3.9 per cent to accept, which is more than double card payments.
Consumers do not expect to be surcharged for using cash, as the cost of cash is embedded in the cost of goods or services. Yet they are frequently surcharged for using a debit or credit card.
The RBA will shortly commence a review into these matters and I welcome the focus on this important area.
Payments technology moves quickly, and it is critical that the regulatory environment moves with it. Some legislation governing payments has been untouched for 30 years.
To this end it is also critical that Australia passes amendments to the Payment System Regulation Act which will allow the RBA to adequately monitor the payments ecosystem and intervene when needed.
These changes are currently before parliament and I hope all parties will work together to ensure that this critical legislation is passed as soon as possible.
Finally, in an increasingly digital environment, keeping our customers and the broader community safe from fraud, scams, cyber threats and financial crime, is a significant priority for the entire banking industry.
Criminal activity focused in these areas has escalated since COVID.
Last financial year we spent more than $800 million to prevent, detect, and disrupt these crimes. We have over 4,000 people working full time across these areas and it is now one of the largest areas of operational activity within the Commonwealth Bank.
We were able to cut scam losses to customers by more than 50 per cent in the last financial year.
We did this through several market-first innovations, improved controls, increased alerts to customers, and continued public education and awareness.
We’ve also shared our technology and intelligence with others.
Having made progress across the industry to reduce scam losses the challenge now is to continue to drive them down.
It is simply not possible for the banks alone to limit scam losses across the community.
Broadly there are four steps necessary to build a resilient anti scams ecosystem in Australia.
Firstly, introduce mandatory codes to require banks, telcos, social media companies and others to meet a minimum set of standards.
Secondly, require key players to share information.
In June, we announced that we were the first bank to share information into a new “anti-scam intelligence loop”, to share data about scam activity with banks, digital platforms and telcos.
Thirdly, as a response to this intelligence there should be obligations to act quickly – to lock bank accounts, to block phone numbers and to remove scam ads and accounts on social media.
And finally, there should be a proportionate liability scheme which says to all of these organisations, including of course us, that if you do not meet your obligations then you will be required to reimburse customer losses.
This liability scheme should be simple, efficient and fair for customers with a single front door to access and resolve disputes.
Across scams, fraud, cyber security and financial crime prevention, there are many opportunities for the private sector and the Government to work together.
To this end, we welcome the Government’s focus on expanding the Anti Money Laundering and Counter Terrorism Financing regime to capture Tranche 2 entities.
These reforms will strengthen Australia’s approach, our standing internationally, and will help to protect the community from AML/CTF risks.
Thank you again for the opportunity to appear today. We remain deeply committed to Australia’s success and we hope to provide the Committee with some useful insights this morning.
