Challenges and Recommendations for a New Manager in Australian Banking Sector

This report discusses the challenges and recommendations for a new manager in the Australian banking sector. It explores the impact of the Royal Commission recommendations on the industry and employment. The report also highlights the major HR issues faced by new managers and provides valuable insights.

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5/13/2019

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Table of Contents
Introduction................................................................................................................................2
History of Australian Banking...................................................................................................2
Features of Australian Banking Organisations..........................................................................3
Current Issues and Challenges in Australian Banking Industry.................................................4
Recommendations of Royal Commission and Political Responses...........................................5
Response of Federal Government and Opposition Party about the Royal Commission
Report and Recommendations................................................................................................5
Impact of Royal Commission Recommendations on Banking Industry................................6
Impact of Royal Commission Recommendations on Employment in Australia....................6
Major HR issues For a New Manager in Australian Banking Sector.....................................7
Recommendations......................................................................................................................8
Conclusion..................................................................................................................................8
References................................................................................................................................10

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1. Introduction
Australian banking system is vital for Australian economy and financial system.
Although from last couple of years, the Australian banking system is facing strong corruption
and fraud charges in the country for doing unethical practices in the organisation. There are
many other issues and challenges that Australian industry is currently facing and it needs
massive banking reforms in terms of legacy system, cultural development, technological
adoption, regulations, and in the field of organisational working environment etc. In such
circumstances, it is very tough for a new manager to handle these challenges in Australian
Banks. However, for a new manager who wants to join an Australian banking organisation
from other country, it is really tough conditions and circumstances to join. There are several
other HR issues, which is included in this report that a new manager will have to face in the
country. This report also includes some important Banking royal commission
recommendations and its impact on banking industry and employment in banking services.
2. History of Australian Banking
The first Australian Bank New South Wales was established in way back 1817,
almost two century ago. After this, another bank was established in London in 1844, named
Bank of Australasia (Reserve Bank of Australia, 2018). However, later its name was changed
and it is known as Australian and New Zealand Bank (ANZ Bank). However, currently there
are many banks are operating the business in Australia. There are few overseas banks are also
operating the banking operation in Australia through subsidiary branches. However, currently
there are four big banks in Australia, which are operating their business in the country, and
these banks have a massive impact on Australian economy and other small banks as well
(APRA, 2019). These banks are explained along with their customer size in Australian
banking sector in the figure.

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These four banks almost cover 75% of customers in Australian banking industry and
affect the banking business of other small and large banking organisations such as Bank of
Queensland, Bank of Melbourne, and Adelaide Bank etc. (Reserve Bank of Australia, 2018).
However, because of some international overseas banks and small and medium size banks
organisation, there is a tough competition among these four banking organisation to increase
the market share in Australia. Another cause of increasing competition is that Australian
government is privatising the banking industry and liberalising the banking policy and
restrictions on entry of foreign banking organisations (Kamalnath & Lin, 2019).
3. Features of Australian Banking Organisations
There are following major features of Australian banking organisations:
1. Australian banking organisations are known for various product and services that they
are providing to its customers such as providing loans to customers (personal loans,
Education loans, Agriculture loans, House loan etc.).
2. Australian banking organisations are playing an important role in Australian financial
system and its economy. The major banking organisations are holding more than 55%
of total assets of Australian financial institutions and other small organisations.
3. Bank deposits the investment funds of people in saving accounts, fixed deposits, etc.

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4. Numbers of small and semi-large banking organisations are increasing every day.
Apart from this, the number of overseas and international banks is also increasing in
the country (O’Brien, 2019).
5. Authorised Banking Institutions (ADIs) such as banks and other financial institutions
hold more than $4.6 trillion capital, which is more than two times of total Australian
nominal economy, which is supposed to be only $1.8 trillion in 2018 (APRA,2019).
4. Current Issues and Challenges in Australian Banking Industry
The Australian Banking industry including some of the major financial organisations
are facing strong corruption charges from last two years. The major Australian banks and a
major financial giant like AMP are facing strong allegation of frauds, bribery, charging fees
for no service, misuse of funds, misleading regulatory bodies, display false and misleading
information to public and regulatory bodies etc. (Legg & Speirs, 2019). After all these
corruption charges, the Australian government make a commission over these frauds and
unethical practices of banks, which is called Banking Royal Commission. In Feb 2019, the
Australian Banking royal commission submitted its final report to the government (Hargovan,
2019). Based on investigation report, the Royal Commission stated that banks were involved
in many unethical practices and frauds, which are as follow:
1. Unethical Practices: Banks were involved in various unethical practices such as
taking bribes and doing frauds. Staffs were also involved in unethical practices.
2. Misuse of Funds: Banks were misusing the funds of investors and using the
money some other market or funds like speculative market etc.
3. Charging Fees for No Service: The Australian banks were involved in charging
fees for no service. It means the major banks were deducting money from the
bank accounts of customer for ATM charges, account maintenance charges, and
other taxes for those services that banks never provided to the customers (Hayne
Report, 2019).
4. Misleading Regulatory Bodies: Banks were representing false and misleading
information to the regulatory bodies. Banks mislead the regulatory bodies and
government authorities by showing them inappropriate and unreal information and
data about the banking operations (Hayne Report, 2019).
5. Involvement of Senior Leaders: It has been investigated by the Royal
commission and it is also included in the final report of the royal commission that

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the key persons of the banks like Bank executives, senior leaders, branch
managers etc. were also involved in the corruption and everything was happed
under the awareness of these people. Even the staffs of the banks were doing fraud
and it was well known by the superior (Hayne Report, 2019).
5. Recommendations of Royal Commission and Political Responses
The Royal Commission included in its report that Australian banks immediately need
major reforms. The reforms should be in form of culture, regulation, and ethical behaviour of
people in the organisation. The Royal Banking Commission recommends 76 points to
improve the current situation of Australian banking (Legg, 2019). In such a critical situation,
it is really challenge for new manager to work in Australian bank and adjust in this critical
scenario. The Royal banking commission also stated in its report that the role of senior
officers and leaders of the banks was questionable. In such circumstances, it is a challenge for
a new manager to honestly performing his/her duties in the banking organisation. The
behaviour and motivation level of employees is also a major question in front of a new
manager, that how manager will encourage people towards ethical approach within the
workplace (SBS News, 2019).
5.1 Response of Federal Government and Opposition Party about the Royal
Commission Report and Recommendations
There were some positive response from the Australian federal government and
opposition party towards the Hayne report recommendations. This can be included in
following points:
1. The federal government of Australia is working on passing new laws related to
banking frauds and corruption. The Australian Federal government stated that in the
new law, people who will involve in any banking frauds would be treated under the
criminal offense. The penalty and punishment under such cases will be so strict
onwards, if any people will be found guilty. The banking law will not discriminate
about the punishment and penalty based on gender or designation (Marsh & Phillips,
2019).
2. The opposition party is also supporting the Federal government of Australia and ask
them to corporate a new law enforcement agency that will monitor the banking
organisation and their operations. This enforcement agency will ensure that

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organisations are doing ethical bank practices or not. Although the Australian
government is already working on making a law enforcement agency for banking
organisations but it is still under discussion about the rights and roles of the agency.
3. The Government of Australia is making strict laws against the banking corruption and
frauds.
4. The federal government is supporting and working to bring a new approach in the
banking organisation that is based on “free for all” instead of “fees for no service.”
5. Apart from this, government asked the banking organisation to audit their balance
sheet and records on regular basis with a government registered audit body.
5.2 Impact of Royal Commission Recommendations on Banking Industry
The banking industry has a strong need to work upon the recommendations of
banking royal commission. However, promoting ethics and organisational culture should be
the main priority of any banking organisations. Therefore, the banks should respond the
Hayne recommendations in positive ways and should implement the recommendations in the
organisation as they are now doing. Banks are now working on promoting organisation
culture and ethical practices in the banks. To promote a good organisation culture training
and development is essential and banks are working on it. Apart from this, banks are working
on improving its organisational rules and regulations (Winter, 2019). Involvement of any
person in any banking frauds or unethical practices will be treated as the serious offense and
the person will be terminated or suspended from the organisation if the person will be found
guilty in the inquiry. The laws and regulations of the organisation will not discriminate based
on gender and position in the organisation. Apart from this, it will be the responsibility of
banks that no customer will be charged for extra services or for those services, which were
not provided by the banks. The top executives and senior manager of bank will ensure that
customer’s funds will be utilised under the law and financial regulations. However, the
regulatory bodies will ensure that every bank will follow the banking law in the country
(Landmann & Hess, 2018).
5.3 Impact of Royal Commission Recommendations on Employment in
Australia
The image of Australian banks has been destroyed in the mind of youths. Those
people, who were dreaming as their career options in the Australian banks, were very
disappointed with current frauds and corruption charges on the banks. This will definitely

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affect the employment opportunities in banking sector. However, a new manger will have to
face many difficulties while hiring people for banks. Although this image of banks can be
corrected by selecting appropriate decisions and with an honest work, but it needs a good
decision-making power and leadership skills in the new manager of the bank (Chalk &
Picketfence, 2019).
5.4 Major HR issues For a New Manager in Australian Banking Sector
Australian banks are currently facing large number of issues. However, there are some
HR issues are also positing threats and challenge for a new manager in Australian bank.
These HR issues and challenges are as follow:
1. Engagement of Employees: People in Australian banks are not immediately involved
in any change or operation of the organisation. People normally resist the change.
Apart from this, the employee and staffs are involved in various unnecessary activities
that affect their Woking capability in the organisation.
2. Discrimination in Salary: The low salary of manager in compare to other senior
executives of the organisation is also a major concern for new manager. People who
will join Australian banking organisation from a foreign country might have to face
various challenges in other countries like Australia such as high rent, high living cost,
basic facilities cost etc. Therefore, salary will be a great concern for the new manager
(Casson, 2019).
3. Poor working Environment: Because of the current corruption charges and
allegation charges, the working environment in Australia is not very good. People are
hopeless and demotivated because of involvement in frauds of some key person of the
organisation. Therefore, motivating people and encourage them for work is also a
challenge for ne manager.
4. Maintaining Relationship: A manger will have very work hard to establish a good
relationship with other members of the organisation. Maintaining diversity in the
organisation will also be a challenge for the organisation (Gilligan, 2019). For
example, a manager who comes from Asian countries will have to face many
difficulties to adopt living style, language, attitude, and culture of Australian people.
Overall, a new manager will have to face various HR issues in the Australian banks apart
from the organisational culture and ethics, which is a serious problem in the current
Australian industry. Motivating people and adjusting with the lifestyle and minimum salary

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in Australian banks will be a major problem for the new Australian manager (Spencer, 2019).
Apart from this, encouraging people and motivating them towards ethical organisational
culture and work will also be great challenge for the leader.
6. Recommendations
Based on the above study, there can be following recommendations for a new manager to
before joining Australian-banking organisations:
1. The manager should understand the importance of strong ethical culture in the
organisation and should promote it in the organisation.
2. The manager should encourage and motivate employees to make better work
environment.
3. Manager should conduct training and development programs on regular basis in the
organisation, the employees can be able to understand the importance of ethical
culture in the organisation.
4. A good relationship with employees is the key of better managerial roles in the
organisation. Manager should maintain a healthy relationship with employees and
leaders of the organisation both.
5. Manager should promote equality in both reward system and performance
management. The salary structure of employees should also be reviewed by
managers.
6. Manager should implement the recommendations of royal commission in the
organisation in order to ethical and cultural development of the organisation.
7. Conclusion
In the conclusion, it can be said that Australian banking industry is currently facing
strong corruption charges and allegation of frauds. Therefore, it is tough for a manager to join
the Australian banking industry in present time. Although, the banking reform policy of
government provides a strong hope for the manager to handle such type of issues in the
organisation. Apart from this, cultural diversity, low salary, low morale, and low confidence
of employees, involvement of top executives of the organisation in frauds are some of the
major issues in front of a new manager who will join Australian bank. To face this issues and
challenge, manger should promote ethical work culture and ethics in the organisation.

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Establishing good relationship with manager will also help in promoting ethical practices and
removing HR issues in the organisation.

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References
APRA (2019). Industry Supervision [online]. Retrieve from:
https://www.apra.gov.au/supervision
Casson, J. (2019). What are we learning from royal commissions and inquiries?. Governance
Directions, 71(2), 97.
Chalk, W., & Picketfence, D. (2019). Legal funnies: Avid for scandal: A new dawn for big
banking. LSJ: Law Society of NSW Journal, (54), 106.
Gilligan, G. (2019). The Hayne Royal Commission–just another piece of official
discourse?. Law and Financial Markets Review, 1-10.
Hargovan, A. (2019). Chartered secretary: Banking royal commission final report: Cultural
issues and implications. Governance Directions, 71(3), 128.
Hayne Report (2019). Royal Banking commission into Misconduct in the Banking,
Superannuation and Financial Services Industry: Final Report: Vol. 1
[online]. Retrieve from:
https://www.royalcommission.gov.au/sites/default/files/2019-02/fsrc-volume-
1-final-report.pdf
Hayne Report (2019). Royal Banking commission into Misconduct in the Banking,
Superannuation and Financial Services Industry: Final Report: Vol. 2
[online]. Retrieve from:
https://www.royalcommission.gov.au/sites/default/files/2019-02/fsrc-volume-
2-final-report.pdf
Kamalnath, A., & Lin, N. (2019). Crowd-Sourced Equity Funding in Australia—A Critical
Appraisal. Federal Law Review, 0067205X19831842.
Legg, M. (2019). Litigation: Haynesplaining: Lessons for litigators from the banking Royal
Commission. LSJ: Law Society of NSW Journal, (53), 70.

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Legg, M., & Speirs, S. (2019). Litigation: Why not litigate?: Asic enforcement after the
banking royal commission. LSJ: Law Society of NSW Journal, (54), 70.
Marsh, T., & Phillips, G. (2019). The Hayne report–one giant leap forward for Australia. Law
and Financial Markets Review, 1-5.
O’Brien, J. (2019). “Because They Could”: trust, integrity, and purpose in the regulation of
corporate governance in the aftermath of the Royal Commission into
Misconduct in the Banking, Superannuation and Financial Services
Industry. Law and Financial Markets Review, 1-16.
Reserve Bank of Australia (2018). Equity and Diversity [online]. Retrieve from:
https://www.rba.gov.au/publications/annual-reports/ead/2018/pdf/diversity-
initiatives-and-profile.pdf
Reserve Bank of Australia (2018). The Australian Financial System [online]. Retrieve from:
https://www.rba.gov.au/publications/fsr/2018/apr/australian-financial-
system.html
SBS News (2019). Banking sector crackdown hits parliament [online]. Retrieve from:
https://www.sbs.com.au/news/banking-sector-crackdown-hits-parliament
Spencer, N. (2019). Banks too important to leave in hands of greedy capitalists. Green Left
Weekly, (1208), 7.
Winter, J. (2019). Financial services Royal Commission-impacts on our
profession?. Australian Restructuring Insolvency & Turnaround Association
Journal, 31(1), 10.