In a country with soaring household debt, a bank tries a softer touch with hardship cases.
In 2013, National Australia Bank—a member of the Australia’s banking “Big Four,” with $4.5 billion in cash earnings last year—undertook a radical redesign of their entire debt collection system. The bank brought in Kildonan UnitingCare, a renowned community service organization, to find new ways of helping customers deal with their financial hardships, a critical task in a country with around $2 trillion in household debt.
“People wanted understanding and respect from their bank in the event of financial vulnerability,” said Kildonan CEO Stella Avramopoulos, and NAB listened. It once took the bank 21 days to consider a hardship case; it now takes just 21 minutes on the phone. Loan defaults were reduced by $60 million last year, and complaints to the Financial Ombudsman Service have dropped from 60 a month to 11, the lowest in the industry.
NAB is also targeting specific social issues leading up to financial troughs. For example, grants of up to $2,500 are given to victims of domestic violence to help them leave a volatile situation, and the bank sets up an independent account to assist in the transition. “We are just trying to understand how to help our customers into a better place,” says Joseph Seychell, general manager of the hardship program.