Brian Hartzer’s exit as CEO this week, followed by Lindsay Maxsted as Chairman early next year follow the recent resignations of both the Chair and CEO of the National Australia Bank and AMP.

They are casualties of the new ‘democratisation’ of Australian corporate life. Only CBA and ANZ so far have escaped the Big 4 Banking Guillotine.

What has changed? While the Australian Government has always been answerable to voters, who are also bank customers, politicians have recently capitulated to community anger and given Australian regulators the funding and permission to swing an axe at banking culture in a way never seen before.

Banks are being singled out because many customers feel powerless against these corporate juggernauts and are resentful of the forced dependency we have on them.

Australia has one of the most concentrated banking systems in the world, leaving customers with few options to ‘shop around’ outside the big 4.

As a result, a culture of disloyalty seems to have emerged in the Australian banking system where new customers are given more favourable rates and discounts than existing ones.

The Royal Commission into Misconduct in Banking & Financial Services heard about appalling decisions made by mid-level and senior executives against their customers, including charging dead people. These revelations would normally never have seen the light of day.

This corrosive breakdown in trust between our banks and customers has been a long time coming. But our corporate leaders have been deaf to this creeping loss of trust, and it’s going to take a mighty effort, and many years, to regain it.

When confronted with scandals, our large banks routinely attempted to distract customers, pivoting to the environment, or sport, or the arts, or anything other than the customer.

Who will ever forget Westpac’s advertising campaign about oil-soaked penguins? Westpac’s latest annual report focuses on the $9.3 billion it is spending on ‘climate change solutions’ and a further $3.6 billion to ‘facilitate climate solutions’. It boasts of sponsoring the St George Dragons NRL side, the Queensland Reds rugby team, the Melbourne Cricket Ground and the Melbourne Food and Wine Festival.

All very good, but what about the customer, and the double-digit interest rates banks charge on their credit cards, and the swag of other hidden charges?

Westpac’s five corporate values are ‘integrity’, ‘one team’, ‘achievement’, ‘courage’ and ‘service’. They are bizarrely close to the values of the other three banks.

Westpac’s 33,000 staff may believe in their company values, but many of the bank’s 14.2 million customers would not. It’s one thing having corporate values. It’s another thing to actually live by them.

Here’s the evidence. This week the financial crimes regulator, AUSTRAC, alleged Westpac engaged in widespread, systemic and frequent failures to adhere to anti-money laundering laws and hampered its ability to prevent child exploitation.

It said the bank was “deficient” in multiple areas and failed to report 19.5 million international fund transfers over five years.

AUSTRAC alleges more than 23 million breaches of the anti-money laundering and counter-terrorism financing act relating to money coming in and out of Australia from Europe and Asia.

If the allegations are proven, Westpac could potentially face the first $1 billion penalty in Australia’s history, eclipsing the Commonwealth Bank’s $700 million fine last year over its anti-money laundering failures.

The tragedy is that apparently Brian Hartzer is well respected, and much loved, internally at Westpac. He is seen as a formidable leader.

But staff didn’t create the $6.9 billion in earnings that Westpac made last year. Revenue comes from their customers, and the Royal Commission showed they have been let down.

What does this all mean? Perhaps every bank should scrap their corporate values and replace them with the four pillars below:

1. Reputations – In future, corporate reputations will matter more than brands. Reputation is what your others say about you. Brand is what you say about yourself. Loyalty will be valued, reputations will be tracked, and banking executives remunerated accordingly.
2. Customers – Expect to see banking CEOs of the future fixated with customers. That relationship is much harder to fix than lending your brand name to a sporting stadium. But it must be fixed.
3. Openness – Honesty will be the new black. Openness will be seen as a sign of strength, and the building block of trust, rather than a risk to be contained by lawyers.
4. Communication – The days of the Chief Finance Officer (CFO) being the natural heir to the CEO may be tempered by a growing need to communicate effectively with customers, and to show a greater human side.

Collectively this means that future CEOs will need to have the skills of politicians, with a greater ability to communicate effectively, and a willingness to reach customers and the community more readily.

Suncorp’s new CEO Steve Johnson is a case in point. Although he was Suncorp CFO immediately before being appointed to the top job, he was previously their Head of Communications and he comes from a background as a senior political adviser.

He could be the template of the future.

Disclosure: Adam Connolly is a Westpac customer.

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If you would like to add to this conversation, please email Adam Connolly at Apollo Communications. Stay up to date with more blog posts by the Apollo Communications team here.