Volt Bank CEO Steve Weston used his platform at the AltFi Australasia Summit this week to warn that significant changes lie ahead for the banking system.
“If we’re talking about an iceberg, the royal commission was just the tip. It was the big scandal, but in terms of the volume of issues, those will be lifted out of the water in the next few years,” he said.
Weston, who spent a portion of his career in London, explained that the industry insight he’s provided over the past several months has stemmed from the fact that the UK has experienced a similar version of what the Australian banking system is currently going through.
He said, “The issues that are impacting us – the royal commission, the broker remuneration reviews, responsible lending – that all played out five years earlier in the UK. The terms that we use may be different, but the issues themselves are the same.”
Speaking of the federal budget passed down in May 2017, Weston said, “In one fell swoop the last remaining key bits of banking regulation from the UK were brought into Australia. They came in the form of calling for an open banking review, introduction of the bank levy for Macquarie and the majors, and the introduction of the bank executive accountability regime (BEAR).”
According to the neobank CEO, these impending changes “will be more impactful on banking in Australia than the royal commission.”
After his on-stage talk, Weston further elaborated his views to Australian Broker.
“In Australia, like the UK, we don’t have rules-based regulations. We have principles-based regulation. So it doesn’t say, ‘You must do A, B, and C.’ It says, ‘You must achieve this outcome.’ As banks, we’ve been left to our devices to work out what that means,” he explained.
“If we look at the UK – and I think Australia will be the same – we find out some of those things that we’ve been doing are actually not what the regulators or society expected, so we’ve got to fix them. We’ve got to remediate the sins of the past and put processes in place to stop them happening again.”
The continued tumult in the banking world will likely leave consumers anxious for stability and seeking assistance elsewhere.
“This is a wonderful opportunity for brokers. People are looking for someone to trust,” concluded Weston.