Transcript

Matt Heine (MH):

Hi, welcome to the show. I'm absolutely delighted today to have Marcus Price, who is in many ways a new face in the industry. Welcome. Thank you, Marcus. We've got to know each other a little bit over the last few months, particularly in your new role as CEO of Iress. Not many people would've met you before, so I was keen just to hear a little bit about your background and how you've ended up doing what you're doing. Thanks,

Marcus Price (MP):

Matt. Thanks for the opportunity to speak on your podcast. My background is in financial services but not on the investment side. I've come from probably a banking side or banking background is perhaps how you might describe it. I've worked with companies like Equifax and Illion. My initial training was with BCG consultant for a while and then really worked, I think probably the one thing that most people would know me for is the building of PEXA Property Exchange Australia, which of course is a huge financial services network now a network business which does all the property settlements in the country. I'd sort of got to the end of that probably at the point of thinking, well, I've achieved everything I've could achieve in that industry and for that business, and every CEO knows when it's time to go and when you've achieved what you set out to achieve.

I guess I was sort of looking around for a new challenges, new things to do, and I was approached initially to be a director of Iress. The chairman, Roger Sharp asked me whether I'd consider being CEO. He asked me four times before he managed to convince me that it was a good thing to do. I must say it's been enjoyable because this is an incredibly interesting industry, which has got massive tailwinds behind it. One of the things I often talk about with PEXA was it was sort of a constrained ecosystem, if you like. Once you've done what you needed to do, there was a few things you could do but extra, but really I achieved everything I wanted to achieve, whereas this industry, the sort of potential is pretty limitless and the tailwinds in financial services and this part of in the investment world is really large. So I found it interesting. It's banking technology, which is what I've done all my life. A great bunch of people to work with, so yeah, why not. By the way, I guess I took on the role with the view that Iress had had two founding CEOs, long-standing CEOs prior to me and that the company was looking for an inflexion, so I'm what you would call an inflexion CEO. I'm there to bring about change.

MH:

We might come back to both of those, actually. It's both Iress and also your leadership style, but thinking about some of those early days, BCG Consulting and then moving on to client side if you like, in what you could probably describe as very data driven businesses that were ahead of their time, what was it that attracted you to that part of the industry?

MP:

In every case, it's the same thing, which is the opportunity to create value is the thing that's interesting, and my background is in data primarily, so the idea, we'll live it through a particular epoch if you like, where a lot of what was previously manual processes, manual thinking, even the way we make decisions in lending and so forth was all very manual and the idea that you could automate that and use data to make better decisions and increase efficiency and then introduce a whole bunch of new capabilities into an industry, that's what really attracted me to it because it really is a fundamental change. It's not incremental change, it's step change. In my background alone, I went from what was manual lending and to probably some of your listeners will remember when you used to go for a loan back in the eighties, you'd dress in your best suit and try and impress the branch manager, and if you liked the cut of your jib, you might get a home loan.

The decision was made by a branch manager. These days, the algorithms and machines and software that make all those decisions, that's stuff that I built. It changed fundamentally along with a bunch of other people. Of course, the way that industry works and thinks about itself, that sort of changed. We're privileged and lucky to live in a time where those sort of opportunities are available and Nets no different. By the way, when I look at net wealth as a business, I talk often about this in this business couldn't exist 30 years ago when you didn't have digitised trading and digitised asset classes that you could record on an app, and by the way, you didn't have a phone back then, but even so that's great. We're so privileged to live in this time where those sort of opportunities are available to you,

MH:

And I think that's a great point that you raised and the change management that you must have experienced both in those early days at Equifax and Illion, but I'm thinking more PEXA, which was one of the more labour intensive parts of the industry, and it is remarkable actually now that you look back on what was required. How early were you at PEXA?

MP:

It was the start, right? Look, there've been a couple of goes of what they call, and I always describe it as the most boring thing in the world. I mean really how much duller can it be to automate process of exchanging documents and money to buy a house? It is seriously the dullest thing you could imagine, but I looked at it and got involved with it. There'd been two or three failures run by state governments, and it was thought to be impossible. So I thought, oh, there's a couple of hallmarks that already make it interesting. But then of course, the idea that we very quickly went beyond, oh, this is just automating a manual process to start thinking about what does the transformation look like at the end of it. I mean, we're actually putting people in houses and giving them access to information that they've never had before, never could see, and going through that transformation process with the industry is quite challenging because often the industry doesn't quite work out what the change is until after it's happened, and I think that was definitely the case with PEXA

MH:

Of all the stakeholders who is the most challenging to work with?

MP:

We love them all equally. Matt, of course, that's how we survived. But no, they're all challenging at various times because although I have to say in E-conveyancing, in PEXA, it was very interesting because all of the, we had this light on the hill. We wanted to automate property transactions and whilst the stakeholders, we had state governments, banks, private investors, all sorts around the table, around PEXA, and they all had their own agendas. They all wanted to achieve something out of that venture, but at the end of the day, none of them could achieve anything if we didn't achieve the light on the hill. In other words, we didn't build the exchange and have people participating in it. No one got anything. So when you've got a unifying idea and a principle like that, it's really easy to get aligned, but even from quite disparate stakeholders and shareholders and there's always going to be some disenfranchised groups because change creates disenfranchisement as you go through it, but that alignment was the thing that was fundamental to the success of PEXA.

MH:

And were they shareholders as well, excluding the state government, they were shareholders as well as those that were going to benefit from the process? Yep,

MP:

Absolutely. Started out as a state government project fully owned by a state government. They thought it was an IT project that was part of the problem that they didn't quite understand that we were actually transforming an industry and the vehicle that did so needed to sustain itself. In other words, you didn't just go out looking for grants to keep funding something and that it could was actually, if you think about it, it was a corollary for property of ASX's stock exchange, PEXA's Property Exchange. It's a very similar process, share script, exchange for money, house title, exchange for money. So we conceived of it that way and we were the first ones to probably think of it in that way as well. And so I guess that was part of that whole reforming process. So in terms of shareholders, we had state governments. Initially we had the major banks on the four major banks, and that was quite purposeful because they needed to participate in the process to make this work.

Then we had private investors such as Paul Little's Group, Paul Little, an investor in this as well as Link and Macquarie Bank of course were a big investor as well. So as you can appreciate a very different group, all of whom were represented on the board and all of whom participated in almost every board conversation. So when you can get a group like that, so different, such different interests, some economics, some policy, some process driven, getting alignment with a group like that was a really powerful thing to do and incredibly, I think formative for PEXA, it couldn't have happened without all of those parties.

MH:

I think it's a really interesting story as well because we're fortunate, maybe unfortunate to have a number of close peers that push us along and drive us to innovate, whereas PEXA was really groundbreaking and was uncontested in many ways. How did you create that urgency amongst all of the noise?

MP:

Well, there's also the thing called survival instinct. Pexa burned cash for a lot of years and cost more than people thought as they always do. So survival is a powerful instinct, Matt, we have to get this done or we're not going to skip to the next stage gate. And we did stage gate. PEXA had to hit certain milestones even in funding to keep the faith with funders, you needed to achieve certain objectives. It was very much an outcome driven business. You see it at the end of it when it's nice and glossy and shiny, but just getting the first even lodgment of a document at a single land registry was incredibly significant. The first time we could actually send an invoice that was incredible. There's lots of little mini days along the way that add up to success and you build that momentum of success as well as you go even by setting out smaller targets than the light on the hill are not along the pathway. That helps people in the team keep aligned and keep rewarded because sometimes if the targets too big and it's too unassailable, you can never get there. It's just how is what I'm doing today linked to that outcome or providing that pathway I think really important for people.

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MH:

People that are listening that run their own businesses, is that probably your key learning from that time around that alignment and creating the light on the hill alignment

MP:

Of interest? Yeah. You can't build a venture like PEXA by disenfranchising everyone. You have to engage people including not necessarily financially, but in every respect. Alignment of interest is essential If you're going to actually create a change of that size, knowing that you are going to have to deal with disenfranchisement at some point of some powerful embedded existing way of doing things, there's forces against you when you have change too.

MH:

So fast forward to today. So you've taken over as CEO of Iress, a bit of a crash course in the industry. You had obviously visibility but probably didn't understand it intimately. What did your first 30, 60 days look like?

MP:

It was pretty eye-opening, very eye-opening. Matt. I mean, this is a business that had two founders leading it for 25 years, a foundational business in lots of ways, but a lot of the ways of doing things were not the ways I was used to doing things. And so it was quite a confronting experience, I have to say, and in some good ways and some bad ways. There's lots of great people in our great team of people all very well-meaning and so forth, but there's also a lot of stuff going on. You go, why is that going on? And one of the things that I do enjoy about Iress is from day one, I'm asked a question, what's the purpose of this company? They know, right? And I go, well, at the moment it's kind of like looking through a shopping cart and trying to work out what you're going to have for dinner tonight. So it doesn't really have it. It's lacked a unifying purpose in a lot of ways, and that's driven, I think, quite a lot of fragmentation of what it's about. That's probably my overriding Instinct in Iress is it's working out its identity of what it is and what it needs to do. Well,

MH:

And you're getting closer to

MP:

Yeah. Yeah,

MH:

We look forward to hearing it in due course.

MP:

Yeah, no, it's definitely the case that it's more about stopping doing things and doing things, and oftentimes that's the case. If you're going to achieve something really significant, you do need to keep focus. And if you defocus and start defraying yourself, that can be quite dangerous in any business, particularly when you step away from your core competencies and the things that are making your business great, and it's hard enough to succeed in one or two lines of business, try doing it in four or five lines of business in four or five countries. It's a different story again. Right. Before

MH:

We come back to I guess where you say the big opportunities in the industry and Iress, are there companies overseas or locally that you admire and not replicate? Because I think that's always a bad idea, but take inspiration from?

MP:

Oh, loads of them, particularly tech companies, but I think Salesforce is, for example, a wonderful organisation, terrific culture, really innovative, and that's an example of a company and they tend to be US companies. I guess the ones I note, I think Google's done a great job. I think I love Google the way they've been able to set up their experimentation. They've really kept their core business, but they've been able to still do things. They're two that stand out for me. There's another one which is probably not known, I know it by its previous name, which is Lithium, which is community software engagement software for communities of people. I really like the way they do things way they think about business and the way they think about ecosystems. In other words, these are companies that have all brought a different way of thinking about a problem to the problem and focused really hard on their core and done it really well. Again, driven by purpose. They have a purpose in what they're doing and a belief

MH:

Ecosystems is one of my favourite strategies and it can work in incredibly powerful ways for you or against you. And certainly if we sort of bring conversation back to Iress for a moment, financial services has got so many participants now and we often do research our advice tech report around the average number of technologies in the technology stack, and I think we're sort of pushing 14, which is just far too many. How do you see the ecosystem evolving in the future in the industry, or what would you see other than maybe a hundred percent Iress?

MP:

Actually, actually I don't see a hundred percent Iress. I see quite the opposite actually. I see us participating in a particular way in the industry, but I think one of the things that did strike me about Iress was it was quite inwardly focused as a company really inwardly focused, and it was sort of a 1980s, 1990s software culture really, if I can describe it that way, where you tended to build a piece of software handed over to a client and send them an invoice and you do customisation and maintenance, and those sort of things. And even today we're still working through this. What does the ecosystem around Iress look like? For example, we don't treat our financial advisors well at all, in my view. We've got a long way to go there. We need to be thinking about them as an ecosystem around ourselves and embracing them and thinking about what they need and what they want and allowing them the opportunity to steer what we do.

In fact, as an old company, it wasn't even possible to think like that 20 years ago probably. I think it's fair to say. But the modern companies do think like that. You think about customers and ecosystems, and I don't mean just in customers and advisors, but also the participants around us such as the platforms, of course, net being one of them. We feel the need to collaborate more fulsomely and more meaningfully with those sort of companies as opposed to trying to carve out our spit and defend it to the death, which is I think an old and dangerous way of thinking about a business.

MH:

Speaking of new ways of thinking about business, it's hard to have a conversation these days without talking about ai, generative ai, interested in just your general thoughts on where it's heading, either just more broadly or as it relates to Iress and FinServices.

MP:

Think it's very interesting. I don't see it as a breakthrough. I guess as the first point I'd make, AI has been around for a long time. I was building AI models in the nineties when we were first building credit algorithms to try to work out how to do this. And most people do know this. The generative part of it and the generative text part of AI is definitely a groundbreaking innovation in AI and is making AI more accessible and more part of the actual dialogue. But one thing I'll say about ai, it's terrific and it has a particular purpose and it's very, very good at assimilating vast amounts of information and making it more simply digestible. I don't think it provides any particularly new insights though. It's more of an assembly machine to assemble what in all this huge data set do I need to pay attention to what's meaningful?

And that's something which can be done analytically or anything else. It's basically a correlation machine, if you can want to think about it that way. It basically produces a synthesis of what's in there. And when I think about what's happening in financial services, there's been a massive proliferation of product and services that confront consumers of all types, even in this country. Think 30 years ago you could buy blue chip Australian shares. That was it. Nowadays you could buy anything and even worse from anywhere, anywhere in any offshore market. How many exchanges do we deal with when a person could go on their phone and buy a share on NASDAQ, and it's just, it's extraordinary. We forget that's not, you put that in someone's hands 30 years ago, extraordinary, but think about how much information you need, how much information you've got that you need to be able to make sense of. And so here we have a problem, vast amounts of information, and that's not going to get less, that's going to get a lot more. Then we've got a tool which is actually able to ingest and digest. I think I can see a real role for AI in helping make more simple sense if you like, and provide actionable type of insights that you can actually then go and act on in financial services. And I think that's its found its sweet spot and

MH:

The point that you've made now numerous times. So AI is only really as good as the data that it sits on our industry, and I often say this is sitting on more data probably than any other industry bar, maybe healthcare. What advice would you have for advisors when they start thinking about their data strategy and what they need to be doing to set themselves up for the next couple of years of an AI driven world?

MP:

I think the platforms, frankly us need to be thinking about how to provide toolkits for advisors and people in financial services. It is a technology problem. I first to say, wouldn't be closed to it as the first thing. It's not a threat. It's a tool to be used. It won't replace the judgement and knowledge of an advisor necessarily, and particularly the real crafting of something for a particular client. I don't think it changes that, but I think it does help and I think it helps them consider more things than they would've otherwise considered. But I do think it needs to be embedded as part of their toolkit. So I don't think it's necessarily something they would need to go out and build themselves. For example, they could certainly use chat GPT and produce reports and so forth, but they're going to look like everyone else's. So is that what you want to do? It could evolve. In many ways. I see AI as something we need to be right across at Iress. I think it's something that's because we have vast amounts of data all sitting there literally mouldering away, and we can, I think produce considerable insight from that data by ingesting it and actually summarising it for advisors.

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MH:

Are you excited about the potential product opportunity it creates and when I say product, maybe robo in conjunction with advisors in that hybrid advice model, where do you see it all really heading?

MP:

I think it's getting increasingly difficult for a human being to understand and consider all the various investment scenarios, stocks, options available to people. But I don't see, one thing that AI is not great at yet and probably never will, maybe it will be one day, I don't know, is trust ultimately the investment decision comes down to trust you, trust the information you've got. Do you trust the person giving you the advice? Do you trust, and this is where that I think hybrid always ends up. You kind of come back to it. You sort of still want someone across the table saying, no, this is okay to invest in. I've looked into it, I've got this AI tool which is ingested 500 ETFs, and these are the five that came out, and I think it's that one. You kind of want that. I think there's a real role yet at this stage, I'm a dinosaur Matt, right? I'm old. So I'm sure that younger people will probably feel differently about that and might be quite happy to have five different algos face off on their phone to work out, which is going to give them the optimal result and trust the outcome and that I think I've also got to colour all of my responses with the fact that I'm from a particular generation and next generation might think differently to me.

MH:

I think that validation is critical and regardless of if you've saved up $10,000 or a million dollars,

MP:

It's still your money, right? It's $10,000 to some people's, their life savings, and so that's very important to them and they don't want to lose it.

MH:

The other hot topic at the moment, cyber, it's getting scary out there. What's Iress doing to help advisors with their cyber protection?

MP:

Well, we're definitely all over that. It's something we're vitally concerned about. It's particularly, again, old software. Old software stacks are particularly vulnerable, so I'm very concerned about that. We have poured all of our stuff into the cloud that we can, so we're using all the firewalls and so forth in cloud hosting, which I think is a great help because getting scale in that cyber stuff is important. I think it's more about awareness than anything else, and a lot of the cyber stuff actually comes down to training and behavioural training in your team. Actually don't answer dumb emails. When you get back to cyber, you often find a human weakness whilst you can see very sophisticated cyber-attacks. Most of them are actually not that sophisticated. They're actually pretty basic and with very basic training and understanding, you can do that. So we've got a role to play, firstly with our teams to make sure they're aware of all that.

But I also think to help educate advisors on what to do and what not to do, they don't have the same resources always that we do. So again, that's where I think the role of the community and having a network of advisors who can communicate with one another when a scams going around, let each other know, right? So those sort of things are important. It's both a technical challenge at the level of the software stack, but also a human challenge in terms of what to do and what not to do. And we can solve the human part more quickly than the tech part.

MH:

The community's something that I'm sure a lot of people would get a lot of benefit from, but it takes a lot of courage for someone to put their hand up and say, Hey, guess what? I've been hacked. And that seems to be a problem across all industries. It's not unique to ours. Do you think it's a realistic concept to see more of the industry getting together and actually sharing more stories?

MP:

It's not so much war stories. I think it's actually about sharing information and data. Because the thing about cyber security and hackers is they don't really care which industry. Then they just have a particular scheme in mind. And we had it in property as well, and we've had it in credit. So if something's happening to net is happening to the others as well, and it's a particular format and a methodology. These guys are sophisticated. There's buildings and places that set up to do cyber. This is not a guy in a room somewhere with an Apple computer. This is actually industrial strength financial hacking. They look for weaknesses in transaction chains and methodologies and even the way people do things like for example, in property, which I know well, it was about emailing payment instructions. That was the particular weakness. Now here we do a bit of emailing instructions around between advisors and clients as well, and finding tools to avoid those sort of things and remove the systemic weaknesses is one thing, but also to share information about things that are going around. Don't think it's a game where you can point to the other guy and say, Hey, uh-huh? You got caught because sure as hell, you are targeted just as much as they are. So all boats rise when we share information about cyber.

MH:

And it's very hard for someone to take it seriously until they've had an issue and we see that we can all, as technology providers tell them not to email client's personal information or to share logins in the office, but it's not till you have a problem that you really do take it seriously, which is

MP:

And absolutely Matt, and not only that, you can enjoy this for what it's worth is it always ends up being the platform's problem, not the person's. And so you'll end up with whoever you are, you end up taking the brunt for it, so why would the system allow you to do that? Or why didn't have a check in there or why didn't you have multifactor authentication or why didn't you have this? Not the fact that someone's gone and answered an email they never should have touched despite the fact you've told 'em 10 times not to or shared a password or lost their phone with all their stuff on it. None of those things. It always comes down to the system somehow is a search for the guilty. I think we're going to need to look at cyber much more systemically than that because I can tell you they are

MH:

Absolutely okay.

MP:

They

MH:

Are at the risk of finishing on a depressing note. No, let's finish a good note. Let's finish on a good note. You've obviously now spent a fair bit of time at Iress. You're chatting to the team, speaking to the industry, three years down the track. What does Iress look like? What's the vision you are selling?

MP:

We certainly want a more simple Iress, much more focused on its customer set in Australia, much more networked business, and I mean collaborative business, want to take our place in the sector we're in, want to have much more constructive relationships with the companies around us, such as Net for example, and the other platform providers. For example, in the trading business. We've got other relationships, of course, slimmer, more customer centric. I think we need to do quite a bit on innovation of our core technology. We need to get that back up to speed. We've done the move to cloud, but now we need to do better. I think it's really about delivering on the promise of an incumbent, if you like, and we are an incumbent and we have got a responsibility to deliver for our clients. Firstly, just the basics of what they need, but we also need to be thinking through where's this business going to be in 10 years or 12 years or 20 years?

It's not necessarily enough to go and ask customers what they want. You made the point earlier about ai, where's the AI suite to help me in my business as an advisor or as a trader? Where's the toolkit that's going to help me support my business? And I think we've got to take incumbency very seriously and we need to really think through and bring to the market those changes as opposed to waiting to play catch up. I'd like us to be more forward in that sense in our technology. I'd like us to be more, I'd like us to be more Australian-centric, all those things.

MH:

So just a couple of things to get done.

MP:

Yeah, it's a big challenge. Look, you're turning a ship around, right? It's 20 twenty-five-year-old business, two and a half thousand employees, five countries. There's a lot and a lot of history. I'll make mistakes too along the way for sure, or break a few things. My intent is to try and set up a team that actually can really be empowered to go and deliver for customers. That's the real focus. And for our ecosystem.

MH:

Well, it's great to see you have such huge amount of energy. You're obviously keen to get stuck into the challenge ahead, and we wish you all the best. And more importantly, we look forward to seeing from the sidelines what you and the team are able to achieve.

MP:

Yeah, you can stand by the sidelines, Matt, I'm sure. But yeah, no, I appreciate that and we appreciate the time with Net and the role you play in the industry as well. So thank you.

MH:

Great chatting as always.

MP:

All the best.