The merger earlier this year of the Hunter-based Newcastle Permanent and Greater Bank brands has created a regional banking powerhouse – one of Australia’s biggest mutual banks by net assets.

While the move appears, at least in some part, motivated by an existential fear felt by many Australian banks in the shadow of the big four, it is also a natural fit for two brands with common aspirations: to be both big enough to keep up with the industry’s innovation pacesetters, but not so big as to compromise their deep connection with their local communities.

We recently chatted with James Cudmore, Chief Customer & Digital Innovation Officer at NGM Group, and featured speaker at our upcoming Future of Financial Services, Sydney 2023 event, about how newfound scale has enlivened NGM’s innovation program, what defines a great digital experience, and why, for NGM, being first to market with a digital offering isn’t the priority.

FST Media: Prior to joining the mutual sector, you worked at an Aussie big four in Westpac and spent some time in the UK with Lloyds, two global banking powerhouses. What lessons did you take away from these experiences?

Cudmore: An excellent thing about larger organisations, whether in Australia or internationally, is that you can have so many different careers and different jobs within them. The experience and the diversity they give you are extraordinary. They’re also a great breeding ground for technical skill, offering a diversity of projects and a great experience when times are good, and sometimes even more so when times are a bit challenging.

I got my timing ‘perfect’ and moved to the UK at the end of 2007, just before the GFC turned everything upside down. That experience was vital in understanding what things can be like when times get tough.

Australia is very well managed and well regulated, and the banks are incredibly strong. In the UK, the landscape was very different.

Adverse experiences like that that accelerate your experience in leading teams; those huge levels of uncertainty after periods of great stability and prosperity, which came to a screeching halt during the GFC, really sharpen your skills in leading people. They also train you to make difficult decisions and still innovate through it all as well. As they say, the best way out is always through.

FST Media: How did this experience ultimately shape your leadership style and priorities at NGM – particularly in the context of working within the mutual sector?

Cudmore: Coming back to Australia and into the mutual sector, I must say, the customer model is fantastic. It’s part of a really prosperous cycle in that customers own the Bank; in turn, the Bank can offer customers a better deal, great local service, and then translate that into great business outcomes and strong community support and job creation.

It’s also that ability in a mutual bank to make a decision on Sunday and then start to implement that by Thursday.

That’s a big part of why it’s such a great model, and one that we really, really believe in.

FST Media: So, would you say the mutual sector is a natural fit for you?

Cudmore: The customer-owned model is essentially how the banks were established at the very beginning. It’s a really pure model and a genuine way of helping customers.

The ability to innovate, to try things out at a scale that isn’t as massive as the big domestic or global banks is just really compelling.

FST Media: You’ve had a bit of a title change recently, swapping the ‘product’ part of your ‘Chief Customer and Product Officer’ badge for ‘Digital Innovation’.

Practically, what has this change meant for your day to days?

Cudmore: Apart from having a lot more syllables, the focus is very, very similar! Newcastle Permanent has long had a significant focus on innovating and trying things out, as has Greater Bank.

Both banks also have an enviable position in their connection with customers. Looking at the metrics around advocacy or our CSAT [Customer Satisfaction], that’s something that the major banks could only dream of.

The focus of the role, which I can now do with more impact and learn from a former competitor [in Greater Bank], of different ways of doing things, is really great. The scale changes which provide more optionality but the people are just as passionate, the hunger is as strong, and the focus on customers is just as strong.

FST Media: Would you say the change is indicative perhaps of NGM’s redoubled focus on digital, particularly since the merger?

Cudmore: There’s a lot of talk about banks turning into tech companies. One of the key differentiators of the customer-owned model is that human touch and community connection.

We see technology and digital as an enabler, but we know that it’s the personalised, human elements that really make a difference in our connection with customers and why a lot of customers love the service that we provide – and indeed why it wins so many awards!

So, yes, a focus on digital, but with a personal and human touch.

FST Media: Now in your fourth year at Newcastle Permanent (now NGM), what would say has been your proudest achievement so far?

Cudmore: I have the absolute privilege of leading a team of really passionate professionals and a really diverse portfolio – be it digital, product development, marketing, corporate affairs, foundations, community support, it’s a first-class team, a world-class team.

We take the responsibility that the merger bestows upon us very seriously. Together, Newcastle Permanent and Greater Bank have, collectively, 200 years’ worth of service. That’s a landmark moment for customer-owned banking, and the industry more broadly, becoming the number one customer-owned bank in Australia by net assets.

I feel that forming the NGM Group is one of those moments that’ll set us up for another 200 years of success. It’s very early days; we’re only a few months in, but we’re seeing some great progress already.

FST Media: No doubt there’s been quite a bit of merger activity within Australia’s banking sector, particularly amongst the mutuals. And there is a view that, in order for mutuals to survive, thrive, and effectively compete in Australia, they do need to merge. Do you agree with this thinking?

Cudmore: Mergers will continue to play a really important part in the future shape of the industry. You look at the stats going back 10 or 15 years ago, the number of mutuals has reduced and the sector has been consolidating – that’s no secret.

There are a lot of local credit unions that are loved, but the requirements coming in – the digital, the regulatory – mean that size and scale will be critical.

Our language is, we don’t just want to survive, we want to thrive. But we still want to be nimble and small enough to try stuff out.

As I said, to come up with a concept on Sunday and have it delivered by Thursday.

FST Media: And, both being Hunter-based banks, the merger does seem a natural fit.

Cudmore: The community saw it that way as well. We’re really respectful of the fact that not only our members own us, but the community more broadly feels a sense of ownership as well. That’s stitched into the fabric of the place. We’re delighted with how the community turned out and voted and responded to it also.

FST Media: Looking at your tech program, has this newly realised scale from the merger, enabled you to deliver more novel digital innovations at pace?

Cudmore: A good example: this week we announced for Newcastle Permanent a Digital Home Loan offering. I think the language at one point was you can get a mortgage as fast as it takes to get a pizza delivered.

We believe that the Digital Home Loan [platform] we’ve announced is as good as you’ll find anywhere in the country, if not beyond.

While the build was in progress before the merger, once we came together on 1 March this year, being able to access some of the expertise for Greater Bank actually brought forward a number of elements. Being able to tap into a broader pool of expertise actually gave us a stronger proposition faster. We are three and a half months in, but there’s one example there. And as our teams are integrating and focusing on all of that, we’re really conscious of getting the balance right between making sure that we see technology as an enabler.

Delivering consistent, regular, iterative customer benefit, as well as the core and the base level infrastructure, it can’t be one or the other. It’s got to be both.

FST Media: I did give the platform a bit of a road test recently and was pleased by its ease of use and intuitive design.

What are some of your own hallmarks of a great digital experience? And, perhaps, where might the wider banking/lending sector be missing the mark here?

Cudmore: The word we increasingly hear a lot of is ‘trust’. Reading Michael Rosemann recently, he breaks it down into the components of ‘customer experience’, ‘user experience’ and ‘trust experience’ – and that’s become increasingly important. It’s trust that you’re trying to help me, as a customer, solve problems I didn’t realise I’d have. It’s trust that you’ll proactively and pre-emptively help me manage money better, find a better interest rate, and so on.

From our perspective, supporting digital offerings with humans and doing it with a personal touch really reinforces that trust.

We think being the slickest or the shiniest comes well and truly behind trust, confidence and our relationship with customers.

In terms of ‘missing the mark’, with so many tech propositions in market, there’s often a fine line between innovation and speculation. Where you see features being rolled out, it can seem like a bit of a ‘pick and mix’ – like the lolly wall at the theatre with all these choices you can get lost in.

My thinking is, ‘Let’s be excellent at one, two or three things, as opposed to just okay at 15’. It’s about being deliberate about bringing a proposition to a customer. If you consider all providers and models in the market right now, some go very heavy on features. Good luck to them! For us, we’re aiming to be a little bit narrower, but better!

FST Media: It’s hard to ignore the increasing prominence of Generative AI in all industries, with equal parts excitement and dread over the progressive adoption of the technology.

Firstly, where do you see the most promising applications of Gen AI in the banking and lending space? And is NGM exploring any use cases?

Cudmore: ChatGPT is emerging as a global phenomenon, no doubt, but the core concept of AI has been around for a while. We’ve been using AI for quite some time. For instance, when you ring our local call centre – and, again, back to trust, all of our call centres across all brands are local to the Hunter! – we’ve got an AI-powered voice tool that ensures your query is getting to the right place. The days of ‘press one, press two’ are moving behind us pretty quickly.

FST Media: Of course, this excitement is tempered by concerns around the misuse of the technology, inherent biases within the algorithms, privacy breaches, and potential workforce displacement.

What provisions does NGM have in place to ensure the technology is used responsibly and in the interests of all stakeholders?

Cudmore: You do hear that talked about a lot. However, it’s worth considering that banks today have far more people working for them across the industry than historically; it’s more the shape of the workforce that’s changed so dramatically. If I’d said to you 20 years ago, ‘Why don’t you move to Newcastle and become an expert in cloud computing, in data lake coding, or we’ve got great opportunities in the API space?’, you’d be, well, confused.

There’s growth and potential and opportunity there; it’s just being deliberate about it and not falling for the headlines.

To add on the data protection side, we’ve got a very strong infosec capability at NGM.

Data security and customer trust, for us, is first, second and third.

Both internally and externally, it’s looked at deeply, it’s tested internally, and it’s tested with external experts. There’s a rigorous program around all of that. As the market and the technology moves and progresses, our approach will too. It’s overseen at the most senior levels and taken with utmost seriousness.

FST Media: We touched on this earlier, but I’m keen to expand on whether you see value in NGM as an early adopter or are better placed embracing the tried and true?

Cudmore: We place less importance on how early you are to something and more importance on quality and relevance.

I don’t go to bed at night thinking, ‘I wish we had the first digital home loan ever released in Australia!’, but I do go to bed at night confident that we have got the best.

It’s about being really deliberate. We aren’t as big as the major banks, but we do have significant strength and significant capacity to invest for our size. And we do want to take leadership in the industry when it comes to innovating – but quality-relevant, results-driven innovation, not announcements for announcement’s sake!

FST Media: We’re excited to have you as one of our featured presenters at the upcoming Future of Financial Services 2023, Sydney conference next month!

What do you anticipate will be some of the more likely water cooler discussions amongst your peers?

Cudmore: I keep saying it, but the conversation around trust is ever-increasing; this is something I’m certainly looking forward to exploring.

Also, this idea of platforms convergence – you look at Open Data, at internet banking, the revolution happening in payments, at data sharing, and all the optionality and connectivity that API layers give you and how that’s all converging over time – is really interesting. It’s still early days for Open Banking in terms of adoption and use cases, but it’s something NGM is really interested in leveraging for the benefit of our customers.

As well, how do you get the balance right in innovating without over-investing in something that may not get taken up? This is also something I’m really keen to explore.

And who’s really nailed personalisation? I don’t know. But I’m very open to ideas. ◼

James Cudmore will be a featured keynote presenter at FST Media’s flagship Future of Financial Services 2023 conference, sharing insights on digital CX innovation and how banks’ digitalised service propositions can remain relevant to non-digital natives.

Register now to secure your spot!