Summer questions: Credit chief Keith McLaughlin on planning for uncertainty

Keith McLaughlin, managing director of credit bureau Centrix, says the Government needs to empower businesses and get out of their way and let them focus on growing.

How would you describe 2021 for your business?

We started the year with a strong business plan that was focused on growth by continuing to do what we do best – innovating and offering business owners insights to manage their credit risk through our market-leading data and analytics.

Like so many businesses, things were tracking well until the nationwide lockdown. With the economy paused, the credit market fell, and it has only progressively recovered with the loosening of restrictions.

While the lockdown impacted our business, we’ve been able to take the opportunity to continue innovating and developing new products, which sets us up well for 2022 as the economy enters a post-pandemic phase.

How is your business planning to tackle 2022?

We’re hoping the high levels of vaccination and the Covid traffic light system means that we can avoid another lockdown and the economy can remain open.

This will allow us to continue supporting our customers and grow. But like all business owners, we are also planning for uncertainty and how we will tackle different scenarios.

What will be the major challenges and/or opportunities for your industry?

Ongoing changes to financial regulations are going to continue impacting our business, as well as thousands of Kiwi businesses across the country.

The implications of the recent changes to the CCCFA, for example, is likely to take many New Zealanders by surprise with lenders needing to undertake much greater due diligence when making lending decisions. This will see them looking much more closely at the spending and saving habits of applicants.

A key disruptor on the horizon is open banking, which is already disrupting the financial industry worldwide. At this stage, we’re not sure when it will be embraced by Kiwi banks, but when it does arrive, we are likely to see an explosion of new fintech products that will require the financial sector to adjust their business models and compete.

How do you think the Government has handled the Covid-19 crisis?

While it’s easy to stand on the sidelines and criticise, I do think some of the decision-making has been a little inconsistent and slow to adapt to a rapidly changing situation.

In saying that, you just need to look overseas to see how bad the situation has been in some countries – they have done a good job at protecting our population and keeping our mortality rate low.

What are two key things the Government should do for economic recovery?

At the end of the day, our economic recovery will be led by business and not government.

Government needs to empower businesses and get out of their way and let them focus on growing. Regulatory change should support this – freeing them from unnecessary red tape.

Every business owner I know wants to control their own destiny. We just need to let them get on and do it.

What was the most interesting non-Covid story of 2021?

Personally, I have found the conversation around governance and the Three Waters reforms incredibly interesting. These are major reforms and deserve scrutiny as they will have major long-term impacts on the role of local government.

What are your predictions for 2022?

I think next year we are likely to see the Government quite active in its reform programme.

This is the first time in 25 years that we have had one party in power, and we might not see it again. I would expect the Labour Party to take advantage of their majority next year before the election in 2023.

What’s the worst mistake you’ve made in business?

The most valuable piece of advice I ever received was when I set up Baycorp. I was told “when you’re running a business, you need to make decisions every single day – and you are not going be right all the time but that’s okay”.

The most important thing is what you do when you are wrong and how you go about fixing it.

This is something I’ve carried with me throughout my career. It’s a key part of how we run out team at Centrix – understanding that we will sometimes get things wrong, acknowledge it when it happens and focus on fixing it.

What would you rate as your greatest success in business?

I’ve had a challenging and rewarding career in New Zealand’s financial industry. As a founder of both Baycorp and Centrix, my greatest joy is watching people grow and develop.

Where are you holidaying this summer?

I’m looking forward to getting out of Auckland and putting my feet up on a beach in the Coromandel Peninsula – and I imagine I’m not alone in that!

How has the media reported Covid and what’s your view of the Fourth Estate?

Something I have noticed coming through some of the coverage is the reflection of a journalist’s own opinion or the editorial influence of an outlet on the framing.

Despite this, I think our media’s coverage of the Covid pandemic has been comprehensive and extensive from all outlets, and I have no question around the adequacy and ability of our reporters.

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