Following the release of its full-year 2018 financial results, Mr Thorburn criticised the way banks compete for new customers and those willing to shop around through offering them low interest rates, claiming such tactics are often at the expense of loyal customers.
“Banking does need to change; we need to focus back on customers, building loyalty and appreciation with them,” he said.
Speaking to investors, Mr Thorburn said NAB’s decision to keep its standard variable rate on hold and not follow the other big four banks in passing on the year’s funding costs to home loan customers was out of a desire to promote client ‘trust and loyalty’ and reduce the ‘churn’ through of new customers.
“For me, it doesn’t make a lot of sense when you’ve got a long-term product like a mortgage that the churn is after three or four years, and that’s because they’re getting more aggressive discounts and cheaper prices if they go back into the market,” he said.
“What we’re trying to signal here is we value our existing customers. We’ve got almost 1 million home loan customers at NAB, and we’re signalling to them that we appreciate their loyalty, we appreciate your business, and we want to keep this rate on hold for as long as we can to acknowledge that.”
Mr Thorburn's comments come in the wake of the Productivity Commission’s release of its findings into competition in the financial system in August. The report recommended making it easier for customers to change home loans every couple of years to inspire competition in the banking sector.
As part of the FY18 results, NAB has reported a 14 per cent fall in its cash profits to $5.7 billion. Mr Thorburn ascribed the drop to $530 million in restructuring costs and $261 million in customer-related remediation costs.
