WWN#35 – Changes Overdue for CBA’s Compliance, Customers and Culture

 Commbank’s latest initiative – Rewarding Service and not Sales

What’s Been Happening?


  • Commonwealth Bank accused of ‘serious and systemic’ breaches of anti-money laundering and terrorism financing laws by AUSTRAC. For each of the 53,700 contraventions, the maximum penalty is up to $18 million. $8.9 billion was deposited through CBA’s intelligent deposit machines before the bank conducted a money laundering risk assessment.
  • A week after the scandal was made public, the Commonwealth Bank’s board has announced a cut to executive pay and short-term bonuses for the financial year that ended.
  • In mid-August, the bank announced the retirement of CEO Ian Narev who will leave before July 2018.


  • Perhaps in an effort to improve its image, CBA announced in late September that it will remove ATM fees charged to non-customers for using its ATMs which was followed in quick succession by Westpac, ANZ and NAB. As a result, fees will be abolished at 3400 CommBank machines, 2300 ANZ machines, 2925 Westpac machines and 1300 NAB machines.


  • In early October, rumours of a class action led by Maurice Blackburn against Commonwealth Bank for the AUSTRAC debacle became reality following the announcement that the funding for the litigation by IMF Bentham was now unconditional.
  • Scathing criticism came from the country’s largest consumer group, CHOICE, about the Commonwealth Bank’s Dollarmites scheme which allowed “kickbacks” to schools to “flog their products”. CBA also pays schools $5 for every account opened via the program, and 5 per cent of every deposit made at school, up to a maximum of $10 per deposit.

What Now?

Last Friday (13th of October), CBA announced that it would immediately remove “financial outcomes” from a bank teller’s performance assessment criteria, with customer service being the sole measure of a teller’s performance.

This is seen as the latest move by the bank to endear itself to customers and shareholders following the AUSTRAC money-laundering scandal and the call to ban the bank’s Dollarmites program by CHOICE.

Executive General Manager, Angus Sullivan, said “the new remuneration plan will support and encourage [our staff] to have better quality conversations with customers, understand their needs and provide the best possible service”.

What’s Next?

Moving away from sales-based incentives and recognition programs and towards value-based rewards is certainly a step in the right direction. As Australia’s largest bank, it will still take a number of changes before the bank can be back in the spotlight for all of the right reasons instead of wrong ones.

In her opening statement before the House of Representatives in Canberra, CBA Chairwoman Catherine Livingstone outlined the renewed focus for the bank in:

  • Encouraging a customer-centric mindset that is shared by both management and employees across the company so that customers’ needs are met and outcomes are improved.
  • Reviewing and implementing better monitoring procedures for cash transactions, especially ones that flow through the IDMs.
  • Meeting and exceeding overall compliance obligations to AUSTRAC
  • Fostering an organisational culture that strengthens accountability and compliance



A Summary on Mobile Identity – The New DNA of Trust


About the Author: Rocky Scopelliti – Global Industry Executive – Banking, Finance and Insurance, Telstra

Among Rocky’s series of financial services industry thought leadership reports is one about “Mobile Identity”. The report examines the importance of mobile identity and trust among Gen X and Gen Y who together make up half of the global population. Information was analysed from 318 financial services executives across the Asia Pacific region, Europe and the US and 4,272 consumers across seven countries (Australia, Singapore, Indonesia, Malaysia, Hong Kong, UK and the US). The following is a condensed version of the 70 page report.

Importance of Mobile for Financial Services 

Mobile devices are becoming the gateway to the financial services world. It is increasingly rare to see a financial institution without a mobile application offering in this age that has moved from digital disruption to digital survival. In the last seven years since the smartphone was introduced, these devices have become the primary means for consumers to access financial services. “Both identities and consumption of financial services are now inextricably fused with our mobile device”.

Top Ten Insights

  1. Battle to acquire and digitally engage Gen X and Y is on
  • “Online pure plays” by UBANK and ING Direct have been relatively outperforming other Australian banks. They are both relatively new to playing field – UBANK was established in 2006 and ING in 1999 with both banks using Everification as part of their account opening process.
  • Bendigo Bank and other community institutions (building societies and credit unions) are having a tougher time attracting the younger demographic with the average age for a credit union customer around 51.5 years compared with 42.5 years for banks.
  • Digital channels seems to be a necessary precondition to attract Gen-X and Gen-Y customers.
  1. The basis of identity and security is trust
  • Despite customers trusting their financial institutions more than other types (e.g. government, telecommunications service provider, internet retailer), few are very satisfied with their current institution’s security performance.
  • Trust comes in multiple forms (e.g. knowing that personal information is kept secure, finances are safe and the institution’s reputation for data security).
  1. Consumers are more willing to share personal information with financial institutions than other types of institutions
  • The extent to which consumers share their personal information seems to increase as their wealth increases.
  • 47% of those with a net worth of more than US $1 million would share their DNA profile with a financial provider to ensure security.
  1. Robust authentication methods improve customer satisfaction
  • Only 42% are very satisfied with their financial institution’s authentication methods. Hong Kong had one of the lowest scores with 14% of people being very satisfied.
  • America is a clear leader in this area perhaps due to USAA’s* recent deployment of biometrics (facial and voice recognition technology) across its four million mobile banking app membership base.
* USAA is a San Antonio-based financial services company
  1. Identity theft is impacting Gen X and Y, particularly as their wealth increases and many think it’s the institution’s fault which will inevitably lead to customers defecting
  • 40% of people that have experienced identity theft or felt that their identity has been compromised believe that it was the institution’s fault
  • Over a third (35%) of consumers with a net worth of more than US $1 million have personally experienced security failings with their financial institution.
  • The top consumer concern with identity theft is financial loss, followed by inconvenience of resolving (e.g. setting up new account details & recovering lost funds).
  1. Passwords are a flawed authentication method – and everyone knows it
  • “The whole notion of passwords is based on an oxymoron. The idea is to have a random string that is easy to remember. Unfortunately, if it’s easy to remember, it’s something non-random. And if it’s random, then it’s not easy to remember.” – Bruce Schneirer, Author, 2008
  • Almost half (44%) of consumers have a small number of passwords that they use multiple times across their digital identities, and one in five (18 per cent) use just one common password across all digital accounts
  • 25% of consumers actually write down their passwords
  1. The industry still thinks customer prefer passwords but it’s time to look to authentication methods that garner greater trust
  • Fingerprint scanning is one such method and is perceived as the strongest method of authentication in Australia, Malaysia and Singapore. On the other hand, the United States and Hong Kong rate eye scanning as the most secure method. Indonesia and the UK believe strongly in facial recognition.
  1. The financial services industry recognises that it has underinvested in identity and security-related capabilities but this is expected to change
  • The dominant view in the industry is that the current investment in identity systems is less than appropriate (62%)
  • 87% of respondents anticipate that their institution’s level of planned activity and investment in customer identity will increase
  1. More secure, mobile-based identity is a key part of solution towards mobile as a primary access device for financial services
  • The most important factor when using a smartphone app was the security of access (i.e. only you can access the account). 36% of respondents chose this answer followed by privacy (personal details being protected).
  1. Mobile authentication methods are highly appealing and can have a very strong business impact including acquisition, retention or defection.
  • Gen X and Y are even prepared to pay for this security. An annual fee ranging between US$3 and US$20 (depending on the market) would be acceptable to many.
  • Consumers are split between whether they should be paying for the enhanced authentication methods as more than half consider authentication to be the institution’s responsibility.

For the full report – click here