Mark Jennings looks back over two decades of Kiwibank, formed to provide an alternative to the big Australians
Kiwibank CEO Steve Jurkovich has celebrated two birthdays recently – his daughter’s and the company he heads. Now both are heading in a confident and defined direction leaving behind the hesitancy that often surrounds teenage ambition.
“Twenty years is a real milestone for the company and coincidently my daughter who is a very similar age. She moved to Melbourne a month ago and it struck me that this stage of life marks a coming of age and you start thinking about the next phase. It sort of feels like a change in the guard and changing of focus.”
Jurkovich, who came to Kiwibank after a long career at rival banks has encouraged and driven a cultural change that was just beginning when he arrived . A progressive new brand direction released this week reflects an increasing awareness of te ao Māori and how it is interwoven into the company’s identity.
It reflects a path that Jurkovich and the bank have travelled down over the past three years. From it, has emerged a bank that’s more confident in itself and what it stands for.
Kiwibank’s modern new logo uses a stylised border inspired by the leaves of the harakeke plant (native flax). The new branding emphasises the bank’s natural point of difference with his Aussie competitors and the ambition it has for the future.
“Once you start to think about yourself as a truly New Zealand company, you start to think about your responsibilities and what it means to be ‘of New Zealand.’
“I became aware that we had the right expertise and knowledge around the organisation
but we hadn’t tapped into it well enough, and it gave us this massive opportunity to start to understand how that could influence the way we think about things.
“New Zealand is changing its view as well. If you want to be proudly New Zealand then I think having a good understanding and being respectful of te ao Māori is a necessity and, for me, also a privilege.”
Jurkovich says he and the board are increasingly convinced that purpose and profit can co-exist, and customers want more than just a good banking experience.
“I think many businesses now believe that you can balance performance with purpose, culture and sustainability. You know, our B Corp certification is very much like our Rainbow Tick. Instead of talking about something, we are putting ourselves through a process and have a framework to ensure we are doing it properly. I have really enjoyed this sort of balance.”
While the bank’s stance on many contemporary issues is seen as progressive and leading, the core values remain similar to those in place the day the bank opened its doors in 2002.
Kiwibank’s first CEO Sam Knowles, now a director of Westpac NZ, says the bank was set up with three key objectives.
“We were to be a New Zealand bank for Kiwi who wanted a locally owned bank, our aim was to make banking more accessible and to put the customer first – do what’s best for the customer not what’s best for the bank. I think it is still like this today.”
While there is a case to argue that Kiwibank has not had an impact on the big Australian owned banks that its political champion, the late Jim Anderton, might have wished for, its success as a business is undeniable.
“The business case was to break even in year three. We actually broke at about year two and a half….it was as successful a start-up as you could have really…. we were rolling out a couple of branches every day between our launch in February 2002 and June,” says Knowles.
“We were able to launch with everything on day one…. except we didn’t have a credit card but that was close…. most banks start with deposits or mortgages, but we had full transactional banking from day one.”
Knowles says being able to build on the infrastructure of NZ Post was pivotal and a huge asset at the time.
“I had banking experience with BNZ and National Australia Bank and I saw straight away when I came into NZ Post that we would have a national population service on day one. People were coming in to pay bills and actually, about 20 percent of the population was coming in there to do stuff. We had about 300 branches and the next bank had 200 branches.”
The bank’s early customers were “passionate Kiwis who wanted a New Zealand bank and those that were attracted by our higher deposit rates.”
Early on Knowles says he concentrated on what the bank wasn’t getting right first.
“I had my desk right beside the call centre and my media person three metres away and as issues came up, we dealt with them immediately. I used to listen in to the calls and I think at CEO level that is a really important thing to be doing.
“I learnt that when people change banks there can be a few problems, like when people’s pay doesn’t appear in their accounts at the right time!”
By the time Knowles left the bank in 2010 it had 700,000 customers. Steve Jurkovich says Kiwibank now has more than a million customers and 48,000 business customers.
Reflecting on its 20-year history, Jurkovich believes the GFC in 2007 was a time when Kiwibank proved its mettle.
“The GFC was the big moment. I sort of looked at Kiwibank (Jurkovich was in business banking at ASB at the time) and they did stand apart because, you know, globally there was a credit crunch. It meant that funding markets really were closed at times, and during that period of about a year and a half Kiwibank was one of the very few that were truly open for business. They grew a strong home loan book
‘It was one of those moments where Kiwibank has been able to stand for something different, and I think Jim Anderton wanted Kiwibank to stand for something different in a market that was very strongly dominated by Australian owned banks.”
Finding a chink in the armour of the Australian owned banks and convincing people to switch remains a significant challenge despite the widespread recognition that billions of dollars drain away from New Zealand to Melbourne and Sydney every year.
“The Aussie Banks and their subsidiaries in New Zealand, are clearly in the top 20 performing banks in the world by any measure, profitability, return on equity, you choose the metric. We know our true cost to income ratios, so we know we’ve got a competitor set that are absolutely amongst the best in the world,” says Jurkovich.
“But we’ve given a million customers a different option than they had previously. I think we have helped pricing for everyone particularly. When we dropped our floating rates in recent times to support the COVID recovery we were big enough to be niggly.
“If you take out all the big Aussie subsidiaries and Rabobank who only does agriculture, and we don’t do agriculture, in total we are bigger than TSB, SBS, Heartland, Co-Op, and other subsidiaries like Bank of China and CCB (China Construction Bank) combined, so actually in 20 years we’ve made a pretty big impact.”