Written by Julie Hunter, Commonwealth Bank Of Australia. Shared on Business Insider December 10, 2019.
The structure of the global economy is continuing to change, as it has since the turn of this century.
Technology has rewritten operating protocols for many industries and businesses while at the same time changing the nature of relationships between companies and their customers.
These technological changes have also empowered disruptors and encouraged changes in relationships between industries throughout the economy.
These structural changes to many relationships have seen the emergence of powerful synergies which can be accessed and enhanced across industries and businesses.
Recognising this, and a number of associated trends, the Commonwealth Bank restructured its Institutional Banking and Markets division along the lines of ecosystems, allowing the bank’s customers and bankers to both better access its own institutional knowledge and learn from each other.
In bringing different industries and businesses together, the bank is empowered to look at the interdependencies between different sectors of the economy previously seen as unrelated, to provide a more holistic service offering.
Harmonising banking and government leads to less friction in the economy and more resources for services
If you take my ecosystem – Connected services – as an example, we have brought together the business of banking and government in order to better streamline and lower friction points for the citizens and businesses who transact with the government and interact with payment systems day-to-day, year in and year out.
That’s important because when it comes to banks and government, there’s an interconnectedness that is both visible and also invisible.
Banks and governments together provide all of the infrastructure that enable the rest of the economy – basically every other business in any other ecosystem – to actually work.
And they do so directly through elements of cooperation, which is what we’re seeing increasingly across Australia – banks and governments working seamlessly together.
There’s the obvious and visible infrastructure that’s provided by the banking and government sector to other ecosystems – such as roads and hospitals for governments, and from a banking pointing of view, ATMs and point-of-sale devices.
But it’s often at the invisible level where the true pillars of economic activity are anchored.
Government provides things like the legal framework on which all transactions are built.
Banks provide the payment systems and platforms upon which the liquidity of the population and business resides.
Whenever there’s a financial element of any transaction, it all gets put down the pipes that underlie the entire economy – governmental, legal, and banking.
So while these elements may be invisible, they remain very fundamental to the economy.
This is particularly the case in the modern economy, where most Australians are in some way connected to the internet, to each other, to business, and to banking and the government almost 24/7.
Commonwealth Bank has been able to work with governments across the nation to better enhance this interaction with business and the citizenry.
The aim is to lower the cost of transactions and thus free resources back to governments who can then release money back into the system for better provision of services.
You can already see it with Transport NSW, where the Opal card replaced the old ticketing system, with payments now expanded to include credit cards and eventually EFTPOS cards and other payment methods.
Perhaps that doesn’t sound particularly revolutionary, given it’s an expansion of what’s already there at present.
But where it gets really interesting is if we expand that ecosystem outside of just the government sector into the notion of “mobility as a service,” which we can do by adding private operators.
The end state could be a subscription-based service, for example, which includes public and private modes of transport. So, you could add in Uber, you could add in taxis, private bus lines, and even in time, potentially air travel.
The possible combinations of banking and governmental infrastructure as a force for efficiencies in the economy is expansive.
Take Australia’s instant payments network – the New Payment Platform – as an example.
It’s a structural underpinning for how Australians, both business and private, can transfer money to each other in seconds.
But it’s more than this. Soon, Australians will be able to action various processes by simply transferring the money from one account to another.
For example, as you pay for your licence renewal, you’ll automatically renew your license because the payment system will be linked to the renewal system removing the need for a separate process.
This technology would allow a seamless and frictionless interaction between people, business, and government.
And think about the possibilities around procurement.
The government sector is a massive procurer across so many sectors of the economy.
Take health for example, the benefits that flow from improved processes, cost savings, and efficiency gains can be enormous and cascade through the entire economy.
For example, imagine a single hospital. Its procurement challenge is enormous, all the consumables that are in use day in and day out.
Efficiencies may be as simple as streamlining a process to subtract just seconds or minutes out of repetitive processes.
When those savings are aggregated at a macro hospital and then health system level, it can free up resources – human and financial – and add up to more funding for better patient care.
At the end of the day, that’s the point of the connection between the way governments and banking are working together to improve efficiency and reduce friction in processes.
This will then deliver better outcomes for individual Australians and across the economy.
Australia can also benefit from banking and government links with the global economy and financial system.
Infrastructure, like our connectedness to the global payments system through SWIFT GPI, build on governmental and banking relationships to empower Australia and Australians to trade offshore.
That, in turn, helps build a stronger, more competitive, and resilient economy for Australia.
Another way technology, banking and government can be brought together is to help deploy resources and form policy.
Government investment in public events is an example.Whether it’s the Melbourne Grand Prix, Bluesfest at Byron Bay, Sydney’s Mardi Gras, WOMAdelaide, or another one of the many other festivals across Australia, benefits can accrue to the organisers, participants and attendees.
This can be done via the collection and analysis of anonymised data to enable governments to think about how these events are staged and what level of investment is warranted for them.
You could use data that shows trends around elements such as spend patterns and public transport demand at the event.
Events are just one lens to look through.
More broadly, the combination of technology, banking, and government is helping Australian governments to manage, understand and improve the delivery and efficacy of policy and services, both at individual endpoints and at a macro level across states and the nation.
The combinations of positive impacts that flow from the synergies of banking and government working together offer substantial benefits to the Australian economy and will help it continue to grow and prosper in the years and decades to come.
Julie Hunter is the Commonwealth Bank of Australia, Institutional Banking & Markets, Managing Director for Connected Services
This report is not intended to be an investment research report, and is not a Commonwealth Bank of Australia Global Markets Research report.
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