Which new Bank Summary

Background

In September 2003, the Bank launched its Which new Bank customer service vision ‘To excel in customer service’. The service transformation consists of three themes; excellent customer service through engaged people supported by simple processes.

The Bank estimated a spend of $1,480 million over the three years to 2006. This included $600 million of normal project spend, and an additional $620 million in areas such as systems and process simplification, technology and staff training and $260 million invested in the branch network.

The Bank provided the following financial guidance:

• An increase in cash EPS exceeding 10% compound average growth rate (CAGR) over the three years, which has subsequently been revised upwards to exceed 12% CAGR;
• Achieving a 4-6% per annum productivity improvement;
• Regaining profitable market share in key business lines; and
• Increasing dividends each year.

Progress in 2005

The Bank continues to make significant progress on its market commitments, with net benefits in 2005 totalling $724 million. Market shares in key business lines have improved (home loans, personal lending, funds management) or are showing signs of turnaround (business lending, deposits). Efficiency gains are being recorded in each segment. Dividends have continued to increase throughout the program.

Progress within the major initiatives include the following:

• ‘CommLeader’ the Bank’s leadership program which provides a common understanding of our approach to leadership and desired behaviours that underpin the cultural change, has been completed by 300 senior leaders;
• Service and sales training for 27,000 staff has been completed, thereby equipping staff and managers to provide higher quality needs analysis and improved service to our customers;
• ‘CommWay’ initiatives have achieved turnaround time improvement across many of the Bank’s processes. In addition, a significant improvement in response times for home loans and personal loans has been achieved with end-to-end systems and process redesign;
• ‘CommSee’ the new customer management platform, that provides our customer service staff with ready access to imaged client documents and authorities, is making it easier to view customer information. More than half our branches now have CommSee operating and we are averaging over 90,000 referrals per month and maintaining a conversion rate of around 30%. Although CommSee is still being implemented across the country, the momentum gained during the second half of the year will position us well to benefit fully from this customer service initiative;
• A further 127 branches have been refurbished this year, bringing the number of branches modernised to help our people provide faster, more efficient service, to 252;
• The new NetBank platform was introduced in April 2005 providing enhanced functionality and greater flexibility for our two million on line customers;
• A redesign of Support Functions has led to the implementation of new business models, achieving simplification and efficiency gains and improving customer service as reflected in the internal customer service survey results; and
• The Wealth Management team achieved its June 2005 goal of reducing the number of product systems to seven. This brings the number of systems decommissioned to 10, since the beginning of Which new Bank.

Key metrics

Customer service

Product sales per retail staff member for the June 2005 quarter are 25% higher than at the commencement of Which new Bank in September 2003.

Customer queue times across branches have improved with 85% of branches now serving customers, on average, within two minutes, compared with 41% at the start of the program.

Our internal Service Quality Index, which tracks a number of our service indicators, has moved from 7.7 in June 2003 to 8.5 in June 2005. Our Strength of Relationship score has increased slightly from 5.7 in the June 2003 quarter to 5.9 in the June 2005 quarter.

Engaged people

The annual employee workplace (Gallup) survey, measuring employee engagement, showed the Bank increased its percentile rating from 74^th in May 2003 to 77^th in May 2005. This is against our target of exceeding the global best practice mark at the 75^th percentile.

Our recently introduced internal customer service survey, which surveys our support and operations staff for quality of service provided, has risen for the third successive quarter. The latest result show 88% of internal customers agree that they receive excellent service.

The staff engagement survey reaffirmed progress with results improving in the last six months. This includes staff having a clear understanding of the customer service vision, where the Bank is headed and that we have an environment where ideas and knowledge are more freely shared.

Simple processes

CommWay, the Bank’s approach to continuous improvement, has completed 41 projects averaging a 49% improvement in turnaround times as well as achieving efficiency gains. Projects were completed across all major operations and support areas. In addition, the program has built competencies across the Bank, with over 450 business people skilled in applying the tools and methodologies as part of their everyday role.

Customers are being provided with quicker credit decisions for home loans and personal loans. The proportion of conditional approvals able to be provided on-the-spot has increased to 71% for home loans in branches, and 45% for personal loans, compared with 47% and 0% respectively at the start of the program. This will continue to rise as additional initiatives are fully implemented.

Focus for 2006

The Bank continues to make significant progress in its customer service transformation and remains confident that with the momentum gained so far, it will meet all the Which new Bank market commitments.

The 2006 financial year will see the completion of all major Which new Bank projects including the deployment of CommSee across Australia. We expect customer service to continue to improve as our people further embrace the service and sales culture, our customer service staff are provided with better tools to serve customers and turnaround times continue to reduce.

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