Reinventing ‘mutual’ Rowan Dowland

Bank Australia 1957 CSIRO Employees Credit Union 1957 – 2003 Various different mergers occur, industry & community credit unions join force, we launch mecu 1 September 2011 A credit union becomes Australia’s first customer owned Bank August 2015 bankmecu became Bank Australia Overview of Bank Australia

Sydney CBD flagship branch Footprint Total assets $4.0 billion Sydney CBD flagship branch Second half 2016 FY16 growth Loans 20% Deposits 12% Capital reserves $437m Capital adequacy 18.67% Customers 126,000 Staff 350 24 Branches In VIC, ACT, NSW, QLD & SA Contact & Lending centres in regional Victoria Bank Australia at a glance

Our Strategy Sets Our Future Direction Our core business is retail banking Vision: To be Australia’s leading customer owned responsible bank Australian Customer Owned Bank of the Year 2016 We are in business for our customers who own the Bank Purpose: To create mutual prosperity for our customers in the form of positive economic, personal, social, environmental and cultural outcomes By living our values we will achieve our vision Responsible to: Our customers Communities The environment International cooperative principles remain part of the Bank’s corporate strategy to this day

Purpose Post WWII – Provide everyday working people with access to credit GFC – Customer owned model that is honest and transparent Today – values based bank creating mutual prosperity 1957 CSIRO Employees Credit Union 1957 – 2003 Various mergers see industry & community credit unions join forces - launch mecu 1 September 2011 Become Australia’s first customer owned bank 17 August 2015 bankmecu becomes Bank Australia 2003 – Adopt sustainability as a driver of the bank

Strategic Planning Matrix The Board’s strategic plan must satisfy the following five principles: Governance - adherence to values - create mutual prosperity Growth at system or above Performance – net interest margin must cover costs Productivity – minimum performance ROA >0.40%, Cost to Income <75% Risk Management – Capital 12.5%, Liquidity 10.0%

One simple value proposition

Expectations

Brand Values

Our Target Market Traditional Current New

Target Market Customers Metrotechs are: Generally very satisfied with BA and are more likely than the average customer to recommend us to someone Again about half consider BA their main bank They are more likely to have an online savings account, everyday banking account and debit care with us – and less likely to have a term deposit – again you can see stage in life determining the kind of products that people need

Target Market Customers As you can see from the Strategic Plan – we remain very focused on our identified target market – socially aware customers. I’m sure you’ve all heard about Leading Lifestyles and Metrotechs by now – I know the marketing team is working on some additional tools and information to help every staff understand who our target market is and how we’re working to attract them to the bank. For the first time our customer research is helping us understand these two groups better. Leading lifestyle customers are: Generally satisfied with Bank Australia and show a good likelihood of recommending the bank to others About half consider BA their main bank, which is a good thing They are less likely to have a home loan and more likely to have a term deposit – mainly due to their stage in life – being slightly older

Target Market Customers 38.13% or 45,546 customers are in our target market (Q4 FY16)

Target Market Customers 44.71 % of new customers are from our target market (Q3 FY 16)

Target Market Customers Average age of new customers is 36 years. (Average age of all customers is 49) 49% of all new customers are aged 18-39

Target Market Customers Average customer value (deposits & loans) of our target market is $63,544 (Q3 FY16) Average customer value of our traditional target market is $37,802 (Q3 FY16)

Why People Join Us Over the past couple of years we’ve been attracting record numbers of new customers by focusing both on our responsible values based brand and on ensuring we are highly competitive in our pricing. As you can see that it is both of these strategies that are driving new customer acquisition – values and pricing.

Customer Centric Issues most important to our customers Acting on climate change Reducing domestic violence and its impacts Encouraging growth in renewable energy Treating refugees fairly and humanely Improve mental health in the community Closing the gap between indigenous and non-indigenous Australians Protecting endangered species and habitat

S&P Global Ratings “We expect Bank Australia’s business base to strengthen (including indicators such as share of main bank customers and share of wallet) following the bank’s rebrand to Bank Australia. We believe the move provides a stronger emphasis to the bank’s underlying ethos - responsible banking – which in essence, attempts to capture socially aware customers. We believe Bank Australia’s primary focus on responsible banking which is entrenched at all staff levels of the bank is an attractive feature for customers and point of differentiation to support its expectations of continued growing customer support. We also consider management’s articulation and effective messaging of its ethos to both new and existing customers is a positive point of differentiation with some peers”.

Points to Consider Questions For Friendly Society Pharmacies Why would I shop at a FSP? How are you different to you competition? What’s your strength? Who is your target market? What’s their CX expectation? How and where do you create value? Do you have a social licence to operate?