History lessons for an unprecedented crisis

ANZ’s head of retail and commercial banking Mark Hand has been at the bank for more than 30 years. He remembers the last recession and the lessons it taught. He’s been through multiple crises.

Here he talks through what he is seeing at the front line and what history tells us about how we will emerge from the COVID-19 crisis.

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We are in the early, acute phase of the COVID-19 crisis but we already know – as with every crisis – there will be winners and losers. This is a crisis which hit fast – even those who could see what was coming could not be ready for the speed of the impact.

“The question of course is one we can’t answer: how long will this go on?”

But if we look at our own business here at ANZ in Australia, we have some customers providing medical equipment and have good links to providers overseas and they’re extremely busy. There are some logistic providers looking to acquire extra trucks.

Up in North Queensland, where it's finally rained, we have farmers with products in demand, good prices and they are producing good crops. They're looking for funding to get themselves set up for next season as well.

On the other side though you have industries including accommodation, travel, restaurants who are doing it tough. Some can reinvent their models and survive. We’ve seen a lot of cafes go take away. That’s a good interim measure but of course there’s an ongoing challenge with foot traffic.

And we mustn’t forget the world also goes on outside the crisis and we have customers still reeling from drought, reeling from bushfire. We can't forget those customers.

The question of course is one we can’t answer: how long will this go on? What will the phases of tightening and loosening social interaction look like? But this feeds into the recovery scenarios.  And, unlike a financial crisis for example, we know there will be an end to the emergency phase.


Now there is no doubt this crisis is on a different scale to any in living memory. Yet there are lessons from those earlier crises - whether financial crisis, smaller pandemics, natural disasters.

In Australia, despite it being more than a quarter of a century ago, people remember the last recession. I joined the bank in 1988 and when the 1992 recession hit I was on the front line dealing with customers. We had so many customers in hardship and I remember what we did well. And what we didn’t.

Those customers have long memories too. When they come out the other side they have very strong memories of how they were treated. I know farmers, former customers, who a generation later still don’t like us. Their kids don’t like us. And I think, quite frankly, that’s justified. We treated some customers very poorly back then.

We’ve actually been bringing in some of our retired bankers, the people who were around at the time, to work through what we did then or in the aftermath of bushfires or other disasters. We don’t want to repeat those mistakes.

We have learnt from that and you are seeing banks – not just us – bringing out packages of support, working closely with government, working to give the greatest possible chance to those business that can come out on the other side and thrive. I'm still haunted by 1992. ANZ was the bank for business when I joined in the late 80s. And just seven or eight years later, we weren't.

Today I am confident we are very well equipped to have proper conversations with customers, we do have very experienced bankers. And we know some of these conversations with customers are going to be very difficult.

That’s why we have tapped into our staff who still remember that earlier crisis. We've tapped into retired staff, I've had conversations with two of our former deputy CEOs who were hardcore commercial bankers for most of their career and we talk about what we should be doing differently this time.

We’re very tapped into our front line staff, our relationship managers. They are the people who know their customers, who understand their local communities, who see business conditions first hand, every day. They’re crucial in guiding us in what we do.


We hear from customers that if people are allowed out of their homes, into restaurants, back onto flights domestically - even if the international borders remain closed for a bit longer - they could stand up a pretty viable business if there's some quick recovery.

That means one challenge is that initial optimism - and most small business people are entrepreneurial and optimistic by nature – is now being questioned. There are concerns this might go on longer. We've put out packages for around six months, for business and residential mortgages with a review at three months.

So understandably people are now thinking about what comes after six months. And then what happens after six months if the bank says "it's time will repay us" or the government says "well your allowances need to dry up now". Realistically, neither the government nor the banks have infinite resources. So I don’t think we’ll see a V-shaped recovery.

In Australia – and globally – we are going to see change. Supply chain change. Change in manufacturing policies. Some sectors would see more immediate impact if the situation eases. If domestic travel opens up, there'll be quite a bit of demand for holidays notwithstanding people are probably going to have generally lower discretionary income. There will be big demand for restaurants and cafes. People are going to want to get out of their houses and do things and interact because they'll have been cooped up for a while.

But I don’t see that bounce in activity coming as fast as some are forecasting.

Meanwhile, there are some companies going into this environment that were probably headed for tougher times anyway. It won’t be magically different if they suspend business for six months. Unfortunately, there will be a certain number of small businesses that don't survive and I fear those numbers will be higher. There will be winners that we don't see coming and there'll be losers that will be in the wrong place, at the wrong time.

Our role as a bank is to have real conversations to find common ground with our customers so they understand we can't come to everyone's rescue. We have to work together and sometimes that means short-term pain to make sure that you've got a viable business in the medium-term. 

Business diversity

One size won’t fit all. We have about 600,000-odd small businesses but at the moment about 130,000 of those borrow. That means 130,000 conversations. And then there are customers that don't borrow because they're small or new or pretty well managed but they are in an unknown situation. Suddenly they might need some debt and some of those customers are very bankable because their revenues will be okay.

After the global financial crisis, Australians generally saved more than they did pre-GFC because they got a bit of a shock and they became slightly better savers. Our corporate and our larger customers definitely repaired their balance sheets. In fact, there's been a reluctance to invest for a number of years – some of that even goes back to memories of the last recession.

At the top end of town - corporate and above – business is pretty well cashed up. They've got good balance sheets. They're ready to pounce. This crisis will make the small businesses who come out of it more financially astute, more aware of the need to put something aside for a rainy day. That's good but it might actually slow investment for a little bit.


Behaviours will change in myriad ways. For example, we’ve seen an uptick in demand for mobile payment terminals. Restaurants who have never done take away or home delivery are doing it – they need a mobile terminal. People are wary of cash. That drives electronic payments too.

Our customers are using more online payments and using cash less so there is less business in our branches. There will be no returning to what we knew as normal. But I think we'll find the entrepreneurial nature of small businesses means they will adapt, they will come out with different plans to what they went into it with. So I think we'll find a much more digital future across the board at the end of this.

We've got passbook customers who now have debit cards and they are using them. These are people who said they couldn't cope without a branch, suddenly their kids are showing them how to buy groceries online and they find it really easy.

We are in a different world. And we won’t go back to the old one.

Mark Hand is Group Executive – Australia Retail & Commercial Banking at ANZ

For more information about ANZ’s relief packages for customers click here


The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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