New BoQ CEO to guide digital transformation
(7 June 2019 - Australia) Brisbane headquartered non-Big Four lender BoQ has announced former Westpac executive George Frazis as the Bank’s new incoming CEO.
Mr Frazis will commence in the role from September and takes over from interim CEO Anthony Rose who replaced Jon Sutton after he stepped down in 2018 due to ill-health.
An experienced banker with 17 years in the industry, most recently as CEO of Westpac’s consumer bank and CEO at St George Bank, he previously had responsibility for consumer distribution, digital, marketing, transformation and banking products and services for Westpac, St George, Bank SA, Bank of Melbourne and RAMS. Mr Frazis ran Westpac’s flagship consumer banking arm until earlier this year when he left the group following a major restructure. Mr Frazis began his career as an officer in the Royal Australian Air Force. and has also worked at Boston Consulting Group. “Obviously that gives him that strategic lens that we think will be important here, and you wrap all that in a healthy dose of passion and enthusiasm. He is so excited about this opportunity to manage a multi-brand franchise – the challenger that can quickly adapt – and that’s why he took the job" commented BoQ chairman Roger Davis. The bank confirmed Patrick Allway would replace Roger Davis as chair in H2 2019.
Under Mr Frazis’ leadership, Westpac’s retail bank attracted more than a million new customers since 2015 while digital channels now account for one third of new sales. BoQ is well aware of the challenges within its retail bank which is effectively franchised with branches being run by ‘owner-managers’. Given the negative press generated by the royal commission, attracting new owner managers has been difficult for BoQ. Speculation about a merger with Suncorp or Bendigo and Adelaide Bank presents as a key challenge for the incoming CEO to navigate yet one industry source believed that BoQ’s franchise model, with 93 branches 'owner-managed', makes a takeover more difficult.
Prior to the appointment of George Frazis as CEO, interim CEO Anthony Rose delivered an eight percent drop in cash earnings in the first half of FY19. “Across the industry, as you are well aware, there have been significant changes in the banking landscape which has created revenue headwinds for the sector. In addition, the outcome from the royal commission is lifting expectations of the regulators. Adjusting to the new regulatory environment will come with a higher cost profile, absent any mitigating actions which we are of course exploring. BoQ also has challenges that are specific to our business, particularly in the retail bank. Our digital customer offering, lending processes and the inability to attract new owner-managers with the overlay of regulatory uncertainty, has hampered customer acquisition and returns" Mr Rose said in Q2 2019. Mr Rose, BoQ’s COO, will remain as interim CEO until Mr Frazis takes over in September 2019.
The challenge for Mr Frazis is to assume a bigger role in a smaller organisation that lacks market share, brand awareness, distribution capabilities and funding advantages that major banks enjoy. “While Frazis has strong credentials and deeply understands the dynamics of Australia’s consumer banking industry, he will be taking control of a regional player with a small geographic distribution footprint, higher funding and operational costs, a lower credit rating and tougher regulatory capital burden” Morningstar banking analyst David Ellis stated. “Bank of Queensland’s lending growth has been subdued for several years. The bank lacks access to lower-cost funding options and has a much lower return on equity than the major banks" Mr Ellis added.
According to BoQ chairman Roger Davis and incoming chairman Patrick Allaway, the incoming CEO’s experience in retail banking, transformation and “strategic acumen” make him “a great fit” for BoQ. We are delighted to have George joining BOQ from his immediate prior role as chief executive of the consumer bank at Westpac. George brings a wealth of experience that will drive Bank of Queensland’s future direction and build on the work already commenced by the management team. George is the right person to lead BoQ during one of the most transformative periods in the banking sector. There is a significant amount of work ahead, and with George at the helm, BoQ is well‐positioned to achieve our strategic goals and deliver for our customers and shareholders” they said.
BoQ announced Mr Frazis was the right choice to lead the bank through a period of major upheaval as the finance sector faces a wave of digital disruption. Mr Frazis nominated “digital innovation” as his top priority for the bank when he becomes CEO. “Disruption across the industry is moving at pace. The BoQ board and I recognise the need to respond decisively to address the challenging environment facing BoQ, and indeed all banks,” he said in a statement. The incoming BOQ CEO said that he would be prioritising “digital innovation that recognises the future of banking lies in mobility and personalisation.”
Speaking of his appointment, Mr Frazis said “Disruption across the industry is moving at pace. The BoQ board and I recognise the need to respond decisively to address the challenging environment facing BoQ, and indeed all banks. However, those circumstances present many opportunities for a bank which is customer focused and can move quickly to deliver a point of difference.”