Speaking at a hearing of the standing committee on economics during their ongoing Review of the Four Major Banks and other Financial Institutions on Thursday (15 April), the chief executives of the Commonwealth Bank of Australia (CBA), Matt Comyn, called on the committee for support in reinstating digital signatures for business lending. The CEOs of NAB and ANZ have also echoed the call.
While e-signatures were allowed temporarily during COVID-19 (to enable credit activities during social distancing/lockdown measures) under section 127 of the Corporation Act, this temporary rule expired last month, which Mr Comyn said was a “disappointment” for the bank as it had to wind back the acceptance of digital signatures on commercial loans.
Senate had been expected to review the changes (which also include provisions around continuous disclosure). However, due to its workload being “quite congested” in the past few months, according to Mr Comyn, this was not extended.
The Senate will not review legislation until it sits again in May, but it has previously suggested that it will not review the bill enabling electronic signatures until August.
As such, he said that he would “certainly appreciate the support from the committee” regarding the “broader digitisation and particularly the acceptance of digital signatures for business lending”.
The CBA CEO said: “That actually has quite substantial impact on turnaround times for business loans, in the order of 24 days to six days… That has been our experience because, clearly, it takes a lot longer for a customer to then go and print out the documents that we provide them and then for them to signature and then send it back to us and then for us to process it.
“An electronic signature just simply enables a much faster facilitation of documents and ultimately gives customers greater certainty in a much shorter time frame,” he said.
“I think that would benefit small-business customers which, as I said earlier, are absolutely the lifeblood of the Australian economy [and] critical to the recovery.”
Jason Falinski, member for Mackellar and member of the committee, added that while government “did allow that during COVID-19, the Senate just didn't extend the exemption”.
He also conceded that enabling digital signatures on business loans “cost less”.
In his opening statement, Mr Comyn told the committee that the bank had seen business owners “thinking carefully about making additional investments and taking on more debt”.
“However, we have also seen great ingenuity, resilience and resolve among the businesses we serve. With Australia’s continued success in combatting the virus, we believe that the high levels of business confidence we have seen will translate into additional investment and jobs in the coming months.”
The major bank’s economics team is reportedly now forecasting that 45,000 additional jobs may have been created in the month of March, reducing the unemployment figure to 5.6 per cent.
Based on the “positive momentum”, the team has now upgraded its forecasts for GDP and employment, expecting to see unemployment at 5.0 per cent by the end of calendar 2021, and 4.7 per cent by the end of 2022.
“Vital to this will be effective access to finance. We are proud to have been the leading partner in the government’s [SME] Loan Guarantee Scheme, with Commonwealth Bank accounting for around half the loans that were extended,” Mr Comyn said.
“This last year has seen us make fundamental improvements to underlying processes so that we can expedite the process for approving business loans. At the same time, we have grown our exposure to a range of industries, including health, agribusiness and transport.
“Our intention is to continue to support our business customers, and so we are continuing to talk to businesses around the country about what we can continue improve further.”