NAB – Page 15 – Digital Finance Analytics (DFA) Blog

ASIC accepts enforceable undertaking from NAB and CBA to address inadequacies within their wholesale spot FX businesses

ASIC says it has today accepted enforceable undertakings (EUs) from each of the National Australia Bank Limited (NAB) and the Commonwealth Bank of Australia (CBA) in relation to the banks’ wholesale spot foreign exchange (FX) businesses.

As a result of ASIC’s investigation, ASIC is concerned that between 1 January 2008 and 30 June 2013, both banks failed to ensure that their systems and controls were adequate to address risks relating to instances of inappropriate conduct identified by ASIC.

ASIC Commissioner Cathie Armour said, ‘A well-functioning foreign exchange market depends on all participants acting with integrity and fairness. ASIC is committed to ensuring that major financial institutions have in place effective mechanisms for ensuring that their employees are trained, monitored and supervised to provide financial services efficiently, honestly and fairly.’

NAB

ASIC identified the following conduct by employees of NAB between 1 January 2008 and 30 June 2013:

on several occasions, a NAB employee on an offshore spot FX desk, acting together with an employee of another Australian bank, shared confidential information and entered offers into the trading platform without any apparent legitimate commercial reason for placing the offers;

on a number of occasions, NAB employees disclosed specific confidential details of pending client orders to external market participants, including identification of the client through the use of code names; and

on several occasions, NAB employees on an offshore spot FX desk inappropriately exchanged confidential and potentially material information about the bank’s client flow or proprietary positions.

ASIC is concerned that NAB did not ensure that its systems, controls and supervision were adequate to prevent, detect and respond to such conduct, which had the potential to undermine confidence in the proper functioning of the market.

Under the EU, NAB will develop a program of changes to its existing systems, controls, monitoring and supervision of employees within its foreign exchange business to prevent, detect and respond to, amongst others, the following types of conduct:

attempts to manipulate the market for a currency, including by placing offers without a legitimate commercial reason and attempts to influence benchmark rates;

inappropriate trading while in possession of confidential and potentially material information; and

disclosures of client confidential information.

The program and its implementation will be assessed by an independent consultant appointed by ASIC.

Upon implementation of that program, for a period of three years, NAB will provide to ASIC an annual attestation from its senior executives that the systems and controls in its spot FX business are appropriate and adequate to effectively prevent, detect and respond to specified conduct. The program will also be subject to annual internal reviews and assessment by the independent consultant for a period of three years.

NAB will also make a community benefit payment of $2.5 million towards advancing financial literacy education related to the aged care sector and the promotion of ethical behaviour in Australian financial markets.

CBA

ASIC identified the following conduct by employees of CBA between 1 January 2008 and 30 June 2013:

on two occasions, CBA employees on an offshore spot FX desk acquired proprietary positions in a currency after coming into possession of knowledge of large CBA fix orders in that currency;

on at least two occasions, CBA employees traded in a manner that may have been intended to cause the trigger price for a stop loss order to trade when it might not have traded at that time; and

on a number of occasions, CBA employees on an offshore spot FX desk disclosed confidential details of pending client orders to external third parties, including identification of the client through the use of code names.

ASIC is concerned that CBA did not ensure that its systems, controls and supervision were effective in relation to such conduct by its employees. Such conduct had the potential to undermine confidence in the proper functioning of the market.

Under the EU, CBA will develop a program of changes to its existing systems, controls, monitoring and supervision relating to the management of fix orders, management of stop loss orders, and external communications containing specific confidential information to address such conduct. The program will incorporate changes already made by CBA as part of an existing review of its Global FX business.

The program and its implementation will be assessed by an independent consultant appointed by ASIC. Upon implementation of the program, CBA will also provide ASIC with an annual attestation from a senior executive, for a period of three years, that the systems and controls in its spot FX business are appropriate and adequate to effectively manage specified conduct risks.

CBA will also make a community benefit payment of $2.5 million towards advancing financial literacy education related to the aged care sector.

ASIC encourages market participants to adhere to high standards of market practice, including those set out in the Global Code of Conduct for the Foreign Exchange Market, published by the Bank of International Settlements (BIS Global FX Code). The BIS Global FX Code provides a global set of good practice guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. Phase 1 of the Code was published in May 2016, and Phase 2 is due for publication in May 2017.

ASIC is grateful for the assistance of our international regulatory counterparts in progressing our investigation, including the UK Financial Conduct Authority and the NZ Financial Markets Authority.

Background

The wholesale spot FX market is an important financial market for Australia. It facilitates the exchange of one currency for another and thus allows market participants to buy and sell foreign currencies. As part of their spot FX businesses, both banks entered into different types of spot FX agreements with their clients, including Australian clients.

Spot foreign exchange refers to foreign exchange contracts involving the exchange of two currencies at a price (exchange rate) agreed on a date (the trade data), and which are usually settled two business days from the trade date.

NAB Says Up To 60,000 Migrant Bank Customer Details Emailed In Error

In a statement released by NAB Executive General Manager International Branches Peter Coad, he advises that NAB has written to customers who migrated to Australia, regarding accounts they established through the bank’s migrant banking team while they resided overseas.

In this letter, NAB notified these customers that an email confirming their account had been established was also sent in error to an incorrect email address.

This error does not impact customers who set up an account in Australia.

Our number one priority was to notify our customers.

The email included customer information such as a name, address, email address, BSB and account number and in some cases NAB identification number – but it did not include any passwords.

We take the privacy and the protection of our customers’ personal information extremely seriously.

We also take full responsibility and we sincerely apologise to our customers for this mistake.

The error was caused by human error and identified following our own internal checks and as soon as we realised what had happened we took action.

We have reviewed these customers’ accounts, over and above our rigorous normal checks, and have not identified any unusual activity. We will continue to monitor 24/7 to protect our customers’ accounts.

We are reaching out to approximately 60,000 migrant banking customers to notify them about this error.

Approximately 40 per cent of these customers have either closed or have not used their account this year.

Furthermore, 19,000 of these accounts have a balance of less than $2.

We have also notified and are working with industry regulators, including the Office of the Australian Information Commissioner and ASIC.

We do not consider that customers need to take any action with their account.

Advantedge to increase rates for variable loans

Advantedge Financial Services (Advantedge) is increasing its interest rates for all variable rate loans by 0.10% per annum.

The new rates will apply to all of Advantedge’s white label partners, and will come into effect from Tuesday 24 January 2017.

Brett Halliwell, General Manager of Advantedge, said Advantedge remains committed to providing aggregators and brokers with the best possible products in Australia’s dynamic home loan market.

“Our white label products are simple, high-value and flexible, and continue to be highly competitive. This rate change is needed due to the challenging economic environment, increased regulatory requirements, and financial market conditions that we, and all lenders, are facing,” Mr Halliwell said.

Advantedge is part of the National Australia Bank Group (NAB) and is Australia’s leading wholesale funder and distributor of white-label home loans.

Advantedge supports mortgage brokers and mortgage managers with end-to-end loan processing and administration support. From pre- to post-settlement stages, Advantedge also gives brokers access to a personalised lending team that prides itself on excellent service.

White label loans are an alternative to major bank loans, designed to give customers the essential home loan features they need, at competitive rates. Through Advantedge customers have access to simple, quality home loans that’s easy to manage and offers value.

White-label home loans are available through just over 85% of Australia’s mortgage brokers, and distributed under the brands of mortgage aggregators and mortgage managers. Those mortgage aggregators include PLAN Australia, FAST, Choice Aggregation Services, Australian Finance Group, Connective, Smartline, Astute, Loan Market and LJ Hooker Home Loans

NAB to launch API Developer Portal

National Australia Bank (NAB) says it will become the first major Australian bank to launch an Application Programming Interface (API) Developer Portal as part of its commitment to improving customer experiences through collaboration.

The portal, which will go live before Christmas, will make selected NAB APIs publicly available to allow third party developers to connect to select sets of NAB data.

The developer portal will begin as a closed beta with NAB approving a small number of developers to take part in the initial concept, before running an open beta more broadly early next year.

The platform will start with two NAB APIs which will host data relating to NAB branch and ATM locations and NAB foreign exchange rates.

Developers approved to take part in the beta will be able to plug into the NAB data for testing and possible integration to their own systems (websites or mobile apps, etc).

NAB Chief Operating Officer Antony Cahill said: “We have invested in our technology and built a rich source of APIs that we have been using for both internal purposes and external partnerships to leverage capabilities and deliver better experiences for our customers.

“With the rise of the digital age and evolving customer expectations, APIs have become core to banking infrastructure to enable rapid deployment of various functions across multiple channels to meet those customer needs and quickly keep pace as those needs evolve.

“Our API strategy is based on three key streams of customer enablement, partnership arrangements and open API categorisation which this portal will be an integral part of.

“We are collaborating with a number of partners to both provide and receive data leveraging API technology including Xero, MYOB and VISA. We want to keep building our ecosystem with likeminded organisations to allow us opportunities to innovate and improve our experiences for customers,” he said.

NAB started using API technology in 2013 with the NAB Flik product (now Pay to Mobile in the new NAB mobile banking app) and has continued to evolve, with the new mobile banking platform rebuilt on our strategic API architecture and the establishment of numerous partnerships to both provide and receive data using APIs.

What is an API?

Application Programming Interfaces (API), allow the exposure of new and existing functionality from core systems within organisations. This in turn enables others (internal or external – depending on access) to place these features in their websites or mobile apps.

How does the NAB Developer Portal (closed beta) work?

NAB will provide two sets of open API data (branch and ATM locations and FX rates). For the closed beta, NAB will approve a small handful of developers to test and learn with, before opening the beta to further third parties early in the New Year. All participants will be vetted by NAB to meet our security standards.

Business Conditions Decline – NAB

The November NAB Monthly Business Survey gave more hints of a moderation in the non-mining economic recovery.

Business conditions slid further in the month, dropping back to long-run average levels for the first time since April 2015 – largely driven by profitability and trading conditions (sales), as employment conditions were steady at already subdued levels.

However, in spite of the declining trend in business conditions, business confidence has remained relatively resilient, tracking broadly sideways in recent times and showing a modest improvement in November. For the month of November, the business conditions index dropped 2 points, to +5 index points, which is in line with the series long-run average. The retail industry continues to be a major drag on conditions, despite signs of improved retail sales recently, and now has the equal worst business conditions (along with mining). Inflation measures in the Survey remained subdued, with retail price growth remaining flat – despite notable increases in upstream retail costs.

In the context of numerous global uncertainties and weakening business conditions, the resilience of business confidence has been encouraging. With that said, it is not clear what effect (if any) the recent US election result has had on confidence. The business confidence index rose 1 point, to +5 index points in November – although this is slightly below the series long-run average (+6). But while confidence has been relatively resilient, it is not at levels conducive of higher levels of investment activity – confirmed by disappointingly soft investment intentions in the recent ABS Capex Survey. Nonetheless, the capex measure in the NAB Business Survey remained positive this month, consistent with an increase in capacity utilisation rates, although forward orders remained soft.

New Banking Model For Latrobe Valley

Nab says Latrobe Valley residents will for the first time have access to a unique model of financial services – with plans for Victoria’s fourth Good Money store to open in Morwell next year.

A partnership between the Victorian Government, Good Shepherd Microfinance and the National Australia Bank (NAB), Good Money stores offer responsible financial products and services including no interest and low interest loans, financial counselling and affordable insurance.

The Minister for Families and Children, the Honourable Jenny Mikakos MP, said that the Latrobe Valley Good Money store would also be the first to offer in-house financial counselling services.

“We’re working to make sure that local people have improved access to appropriate and affordable financial services and products now and into the future,” said Minister Mikakos.

“Importantly, this will be the first Good Money store in regional Victoria and it will have a financial counsellor on site providing free support, information and advocacy for people who are experiencing financial difficulty,” she said.

The Victorian Government is investing $2.9 million to establish and operate the store over four years. Good Money will initially provide services from the Latrobe Valley Authority site in Morwell until the store opens in May 2017.

Chief Executive Officer of Good Shepherd Microfinance, Adam Mooney, said that the Victorian Government investment in the new Good Money store was an important step in helping to secure the economic future of the Latrobe Valley.

“Over the coming years, Good Money will enable people in the Latrobe Valley to keep their cars on the road, meet the costs associated with education and retraining, and afford the things that keep families running like washing machines and fridges,” said Mr Mooney.

“There is high demand for safe, fair and affordable finance options in many parts of regional Victoria and we’re delighted to open a Good Money store here in Morwell. This store will provide valuable services to individuals and families who are excluded from mainstream finance in the Latrobe Valley region,” said Mr Mooney.

NAB General Manager of Retail (Victoria), Mary Scoutas, said the announcement is part of NAB and Good Shepherd Microfinance’s joint commitment to provide more than one million people on low incomes with access to fair and affordable finance by 2018.

“We know there is a real need for initiatives such as this within the community to help build resilience and reduce the risk of falling into a situation of long-term financial hardship,” said Ms Scoutas.

“The Latrobe Valley Good Money store meets the evolving needs of the local community, extends the Good Money franchise to regional Victoria for the first time and builds on our growing network of stores, with three in Melbourne, one in South Australia and another two set to open in Queensland next year.”

The products and services offered through Good Money include:

No Interest Loan Scheme (NILS) – Loans of between $300 and $1,200 for essential goods and services, including educations costs and equipment needed for training.

StepUP Loan – Loans of between $800 and $3,000, typically used for car related expenses, that keep people on the road and enable them to get to work, get the kids to school and stay engaged with their community.

Affordable insurance – simple car and contents insurance with flexible payment options.

Financial counselling – free, confidential and independent debt management and budgeting advice.

The partnership between Good Shepherd Microfinance and NAB has reached almost half a million people in Australia with no and low interest loans since 2005.

Background

The Victorian Government provides operational funding for three Good Money community finance stores in Collingwood, Dandenong and Geelong, with microfinance loan capital provided by NAB. In 2015 Good Money expanded to South Australia and, in 2017, two stores will open in the Queensland. Good Money is a three-way partnership between Good Shepherd Microfinance, NAB and state governments.

NAB Responds to 7:30 Segment On Commission Driven Product Sales

Bob Melrose, Executive General Manager, NAB Retail, provided this statement on behalf of NAB to the ABC’s 7.30 program:

“At NAB we aim to become Australia and New Zealand’s most respected bank. We will get there by putting the customer at the heart of everything we do, and holding all of our people to high standards for ethical conduct.

We are unable to comment in detail on our former NAB employee – however we can confirm that she ultimately resigned from NAB.

We stand by our fair performance management processes.

Regarding NAB’s approach to product based sales and commissions, customer-facing employees in our branches provide help and guidance to identify ways in which we can help our customers meet their goals. Our people are trained on our product features and benefits, to help identify which products can help meet our customers’ individual needs.

But we know more needs to be done on the critical area of product sales commissions and product-based payments. NAB fully supports the review of product based payments and product sales commissions being conducted by Stephen Sedgwick on behalf of the ABA, and we intend to implement the findings of this review.

This year we have also moved away from performance-based, fixed pay increases for customer service and support staff. They will now receive a standard pay rise of 3% per year, under our 2016 NAB Enterprise Agreement – negotiated with the Finance Sector Union.

Safeguards are also in place to ensure we all meet rigorous conduct and compliance standards.

At NAB everyone has a balanced scorecard which includes both financial and non-financial objectives. Performance at NAB is equally balanced against what is achieved based on the scorecard as well as how our people demonstrate NAB’s values and their behaviour.

At NAB we are committed to providing our customers with the right products, the right services and the right advice.”

NAB residential investor home loan variable interest rates to change

NAB has said it will increase its variable rates on new and existing residential investor home loans by 0.15% per annum, effective from Monday 12 December 2016.

This will mean NAB’s Variable Rate for Residential Investment Home Loans will be 5.55% per annum.

There is no change to NAB’s Variable Rate for Home Loans (Standard Variable Rate) for owner occupier customers, which remains at 5.25% p.a.

NAB Chief Operating Officer, Antony Cahill, said NAB takes a disciplined approach to managing its entire portfolio, and needs to make adjustments to ensure it continues to lend responsibly and sustainably to all customers.

“We don’t make these decisions lightly, and these changes reflect the increasingly challenging environment we are currently operating in as we seek to meet the needs of all our customers and our shareholders,” Mr Cahill said.

“As was evident during the recent bank reporting season, net interest margins – the difference between what we pay to borrow funds to lend to our customers and what our customers pay – are down, particularly in home lending, and they remain under pressure.

“A low-rate environment poses considerable challenges to all lenders, and we must respond to what is happening in the economy and the market. In doing so, we have to consider a range of factors including the ongoing need to hold longer-term stable sources of funding, continued elevated funding costs, regulatory requirements, and the competitive pressures at play.

“We will continue to regularly review our products and pricing, and make decisions that enable us to achieve a balance for all stakeholders – borrowers wanting to buy a home or grow their business, depositors and investors seeking a return on their investment, and our shareholders who rely on our dividends.”

Earlier this year, NAB made changes to the way it prices its home loans based on loan purpose and repayment type.

“We can now be more specific in how we manage our entire home lending portfolio in line with economic conditions and regulatory requirements,” Mr Cahill said.

He said the investor segment continues to be important to NAB, and interest rates for all home buyers are around their lowest levels in more than 50 years.

“NAB is committed to providing customers with great value and service, and home loan products that suit their needs at a competitive price,” Mr Cahill said.

NAB continues to offer highly competitive fixed rate terms, and borrowers seeking certainty about their repayments may want to consider fixing part or all of their home loan.

“Switching to a fixed rate loan is a straightforward and easy process, and I encourage borrowers to speak with their banker or broker to find out more about what’s available, and if a fixed rate home loan might be right for their circumstances.

“We’re here to help our customers as they make choices about which product may best suit their needs,” Mr Cahill said.

Conditions, fees and eligibility criteria apply to NAB’s products. Customers who want to know more about these changes are encouraged to contact their banker about what works best for them.

NAB Financial Planners Restructured

NAB Financial Planning has announced changes “to deliver better customer outcomes, provide greater support to advisers, and position the business for future growth”.

In September this year, NAB reaffirmed its commitment to financial advice through the creation of its Consumer & Wealth division, and the announcement of a $300 million investment in its Wealth business.

Following from this, NAB Financial Planning (NAB FP) is proposing to realign its business from 1 February 2017.

“The changes we’re making demonstrate our commitment to face-to-face advice, and ensure we have a customer-focused business that’s positioned for growth,” General Manager of NAB FP, Tim Steele, said.

Under the changes, NAB FP will offer enhanced support to its financial advice practitioners from both their leaders and support staff, and the leadership team will be aligned geographically.

“These changes will enable our business to build deeper local relationships with our customers,” Mr Steele said.

As it realigns its business, NAB FP has had to make some difficult decisions that affect its people, including the decision to reduce the number of entry-level advisor roles from 90 to 35. However, 30 new roles will also be created within NAB FP, and the business will continue to grow its Senior Financial Planner ranks, including supporting eligible advisers to successfully transition into our self-employed franchise business.

“Decisions that affect our people are always the most difficult to make, but we expect that these 30 new roles and other available roles across the wider NAB Group will be attractive to many of the affected advisers, and will present opportunities for career progression and development,” Mr Steele said.

“We’re making these changes so that we can deliver better outcomes to more customers, and position our advisers – and, through it, NAB FP – to succeed,” Mr Steele said.

NAB rolls out 1.5 day loan processing

NAB has announced faster conditional home loan approval processes. The new feature is understood to be the most comprehensive online conditional home loan approval currently available in Australia. It takes, on average, around 15 minutes to complete, with some customer information pre-populated into the form, saving customers time and effort.

As part of the application, customers are asked about their financial position, including their employment, income, assets, and expenses. As with all conditional home loan approvals, NAB will need to verify the customer’s financial position and the security being purchased, and check that the loan is suitable for the customer. Eligibility criteria for using the application also apply.

From Australian Broker.

The National Australia Bank has recently conducted a technology overhaul which it says will dramatically reduce loan processing times and turn a greater number of customer enquiries into sales, reports The Age.

The platform, which has been rolled out in NSW and Victoria in recent months, is used by staff to open new bank accounts, loans and credit cards.

Bob Melrose, executive general manager of retail, told The Age that once the system was installed in NAB’s South Australian branches last year, the number of enquiries that resulted in the customer taking out a loan increased by 20%.

“I always think about that as more satisfied customers, and obviously there’s some flow-on benefits for us in terms of revenue as well,” he said.

While the total number of enquiries that transformed into sales was previously less than half in South Australia, this was no longer the case, Melrose said. He expected a similar increase in NSW, Victoria and Queensland.

“We’re starting to see encouraging signs in those states at the moment, and we will continue to see those benefits grow over this year and next year as well. There can only be upside now for each of the states.”

The changes will lead to fewer staff processing loans, Melrose said. The time taken to approve a loan is a key factor in whether customers shop around for a better deal, he added.

“The worst thing that can happen is if the customer is waiting too long, they get itchy feet and they start to pick up the phone and talk to others.”

While NAB previously took two or three weeks to approve a home loan, the new system meant that more than a quarter of the bank’s home loans were now approved within one and a half days.

“The new platform has digitalised the application experience for our customers and bankers, including a faster time to ‘yes’ and less manual processing for bankers,” a NAB spokesperson told Australian Broker.

“Customers are experiencing a simplified single application process for multiple products and online upload and acceptance of loan documents and a digital 100 point ID check. NAB customers also now receive regular updates on application status via internet banking and SMS.”

Here is NAB’s announcement.

NAB has today officially launched a new, simpler, easier, more convenient way for customers to gain conditional approval for a home loan.

NAB goAHEAD enables NAB customers to apply for conditional approval for a new home loan online 24/7, and receive an instant response.

“We’re saving our customers time and stress, and helping them make an offer on a property with confidence,” NAB General Manager of Home Lending, Meg Bonighton, said.

The new feature is understood to be the most comprehensive online conditional home loan approval currently available in Australia. It takes, on average, around 15 minutes to complete, with some customer information pre-populated into the form, saving customers time and effort.

“Until now, Australians have only been able to receive a rough guide on what they can borrow via online forms. What we’re giving customers through NAB goAHEAD is true conditional approval – just like they would receive if they spoke directly with a NAB banker,” Ms Bonighton said.

“With NAB goAHEAD, customers can complete the application, receive conditional approval, and make an offer on a property the very same day with confidence that they’re backed by NAB.”

As part of the application, customers are asked about their financial position, including their employment, income, assets, and expenses. As with all conditional home loan approvals, NAB will need to verify the customer’s financial position and the security being purchased, and check that the loan is suitable for the customer. Eligibility criteria for using the application also apply.

NAB goAHEAD was developed by NAB’s innovation hub, NAB Labs, which focuses on creative ways to design new products and services for customers.

“NAB wants to create a seamless online experience for our customers, and helping them to conveniently apply for a home loan anywhere and anytime, is key to this,” Ms Bonighton said.

“We’ve also built live chat functionality into NAB goAHEAD so that we can support customers through this process if they need any assistance.”
NAB goAHEAD is enabled through NAB Internet Banking and NAB’s Personal Banking Origination Platform. The new platform was rolled out across the organisation this year to better integrate systems and information so that customers receive the same experience and advice about products and services whether they call NAB, visit a NAB branch, or visit NAB’s website.

“Customers who complete this application online will be able to continue their conversation seamlessly with a NAB banker in a branch or in our contact centre,” Ms Bonighton said.

NAB’s Personal Banking Origination Platform also allows customers to upload, receive, and accept loan documents online, and receive Internet Banking and SMS updates on their application progress.
“This is a significant step forward in our move to fully digitise the home lending experience so that customers can more conveniently, simply and easily make their home ownership dreams a reality,” Ms Bonighton said.