JERMYN, Mr Dan, Chief AI Officer, Westpac Banking Corporation [14:41] CHAIR: I now welcome representatives from Westpac. I understand that information has been provided to you on parliamentary privilege and the protection of witnesses giving evidence to this inquiry. I'd like to invite you now to provide a brief opening statement, at the conclusion of which we'll get under way with questions. Mr Jermyn : I understand we are running a little behind time. I'm very happy to table our opening statement and get into questions, if that's helpful. CHAIR: Sure. Thanks very much. I've been keen to ask a question, similar to many we've had for those giving evidence to us across this inquiry, on the understanding of what AI sovereignty means. In particular, I'd be keen to get your reflections on AI sovereignty in the banking sector. What does it mean for the business but also more broadly for the country and the economy? If you could make some reflections on that, that'd be great. Mr Jermyn : Of course. Thank you. From a Westpac perspective, the way we think about sovereignty for ourselves is very similar to how we perhaps should think about it at the national level, too. For us, it comes down to, I would say, capability and optionality. It's self-determination around choice. For us internally, that's why we're very focused on the skills and training of our people, enabling them to have access to the tooling. As it's evolving very quickly, of course, we need to make sure that everybody has a stake and a fair degree of exposure to trading and optionality, in that respect. I think also around self-determination is the choice of technology. We run a very complex organisation. We have considerations around cyberdefence, fraud, scams and customer service, and obviously we do that within a regulated environment. It's vitally important that we're able to choose the best tool for the job. It's taking that up a level to the national level. That's why, in our submission, we recommend looking at accreditation and training across Australia and trying to be consistent about that but also preserving optionality around the value chain of AI. I think, at the national level, this means looking at the broad range of what it is to derive value from AI and to use it effectively and safely, whether that be from an infrastructure or energy perspective, through the actual model training, which I know is a hot topic in the committee, and, most importantly for Australia, in the productivity dividend, value and economic dividend for our people that are possible from applications. That's really, I think, where the opportunity for Australia lies—in the safe and responsible deployment of AI in many different circumstances. And it's one that Australia is naturally well suited to. I think we have a global reputation for fairness. And I think, in an era of increasing scrutiny on these technologies, trust is probably the most obvious component that we would relate to at Westpac. CHAIR: Trust is definitely something I'm very conscious of as well. I've made this comment a few times now: I don't see how we can gain the true benefits of this technology without trust. On that, in your view, in terms of capabilities, what should we be making sure we control in order to ensure the continued operation of financial services during a major geopolitical or cyber or supply-chain disruption? Obviously, this technology and the state of geopolitics at the moment are all heightened in our awareness— Mr Jermyn : Indeed. CHAIR: but in particular, I suspect, in your field. So if you could reflect on that, that would be very helpful for the committee. Mr Jermyn : Of course. And you're right, of course—these issues, particularly of security, are the ones that are the most resonant for us. I think it's where we would also encourage—and we would be happy to see it—the committee to come to consensus on something that keeps not just Australia safe, but the critical infrastructure too. For us, that, in particular, is in terms of defensive capability. There's a lot of talk about frontier AI and what it can do. It's very broad multi-purpose technology, of course. The one clear part where supremacy at being at the absolute edge of the frontier is an advantage that is very difficult to replicate any other way is in cyberdefence. That's an area where, obviously, Australia has a great position, through Five Eyes, with its partners and strategic allies. I think sustained access to the frontier-model capability for Australia is going to be critically important for defensive purposes; and, actually, I would extend that into critical infrastructure such as banking, for example. From a cyberdefence perspective, it's well known at this stage that Mythos, and OpenAI's alternative, Daybreak, are kind of a key part of what we and other banks are doing to ensure that we're resilient to attack. Whilst we're in a position where we're using overseas companies to do that—and there are limitations around what we can do from a cross-border perspective—I would encourage consistency and using our strength as a nation to apply the same degree of access to critical infrastructure. We, at Westpac, do use those models for cyberdefensive capabilities, but it's not a given that we do. Other banks or other critical industries would, I would assume, at this point, be negotiating individually with each of the providers of those two models. CHAIR: As an extension of those remarks, do you then see the opportunity available to Australia in these hyperscalers seeking to train here—to bring some of their training onto our shores—as a way to help us have continued access to these frontier models, given that we basically need to have them, in terms of cybersecurity? Mr Jermyn : I think that's the critical consideration, actually. What can we do, as Australia? And what are the many societal impacts of AI and training—and its broad implications that we are trading off positions in policy against investment from overseas? We'd certainly like to welcome foreign capital to grow the economy of Australia. The area we are probably most focused on ensuring that we maintain access to is those frontier models. I think that's probably a sensible position to think about as a prism for other downstream considerations, which I know the committee is considering. CHAIR: I appreciate that. Deputy Chair. Senator DUNIAM: My very brief questioning centres around what experience you, as a financial institution, are being exposed to when it comes to experiences overseas—namely, in the US or any other jurisdiction you have relations with. I'm sure you talk to counterparts in other organisations around learnings from other jurisdictions. So, whether it be related to the security components and the risks and advantages associated with AI, or the productivity gains, can you give us some insights on things that we might be able to pick up so we don't end up reinventing the wheel here? Mr Jermyn : Sure. It's certainly not just from a Westpac perspective, but from working in AI in multiple jurisdictions, in banking and beyond, over a couple of decades now. I've seen a lot of different things over that time. Certainly, there has never been a time quite like now. In our conversations with our colleagues and friends in various different jurisdictions—commonality, I think, on that question of access to frontier models for defence, is a common practice for us in the broader field of fraud scam cyber detection anyway. We live in an interconnected economy. If you look at the US, I think it is Scott Bessent who has largely driven the collaboration of banks on things like Project Glasswing. Looking at similar industry-standard approaches for banking for defence is a positive step. More broadly, in the UK, there are certainly big sovereign investments in building proprietary technologies and infrastructure and creating investment vehicles to promote growth and local industry. These are things that I think Australia could take some cues from. I would also say this is a very new technology. Australia itself and its banking sector are well mature in the application of AI. AI as a technology has existed for a long time. Clearly, the frontier, agentic AI that is operating at great scale now is a different flavour of it, with its own unique concerns, but many of the considerations of the safe and responsible use of AI are, really, technology neutral. We've operated under those for a long time would certainly would advocate for using existing legislation where it already does a good job of making sure that we behave appropriately. Senator DUNIAM: A lot of people have said that: use the existing legislation. I think there's obviously a desire to go there because, of course, there's no need to legislate further in those situations. It's just, as the previous witnesses said, the unknown unknowns that we're now delving into. That's it from me. CHAIR: Senator Dolega. Senator DOLEGA: Quick disclosure—I am a Westpac customer. I have banking with you guys. I'm curious about how Westpac uses AI for customer-facing interactions. Are you making sure you're keeping security—whether it's IVR, over the telephone, in a webchat or in an app? Mr Jermyn : Customer security is obviously paramount, and there are multiple steps that we take that I think you'll hear pretty commonly from a lot of the deployers of this technology, around guardrail models that ensure that we're grounded in those answers that we can give and that we have cyber protection for jailbreaks and things of that nature. More broadly, on the customer-facing side of AI, one of the primary uses for us is empowering our people, our frontline staff in branches and call centres, with AI tooling. We're pretty sure we have—as our friends, or suppliers, tell us—the highest rate of consistent AI use for an organisation of our size in the world. About 96 per cent of our staff across the entire bank are using AI tooling at least monthly, and they've all completed voluntary training. One of the key parts of this process for us is that we really want to encourage our people to have a great experience and serve customers well. We think AI can help, but we don't mandate that you must do that. If you approach AI adoption with a more positive mindset and think about what it can do, you see incredible outcomes from that. Our staff in branch are using instant-answers tools to get access to information that was previous very difficult to get access to. We have agentic AI solutions for our mortgage operations process. As part of applying for a mortgage, some of it can be paper based. You have to upload a statement or an ID. You can get that wrong, or it could be a fuzzy copy, and it takes up a lot of time for our bankers, who subsequently have to call the customers back and say, 'I'm sorry; that's not quite right.' Our bankers actually actively encourage us to apply an agentic solution there that checks for the customer. We've saved an estimated 100,000 hours of banker time annually on that mortgage process alone, and that time is used by the bankers to have more detailed conversations about that process. We certainly see AI as providing a really positive way for our people to serve customers, but it is not the only way, by any means. Senator DOLEGA: How are you reinvesting those hours into the organisation? That's a huge productivity increase by the sounds of it. Mr Jermyn : That instance is in the exact same process, just a more valuable part of it, where our people's skills are more appropriately used. The time that you would previously, as a banker, have had to spend effectively doing admin to call a customer back up and say that the details of the application are not quite right—they are able to get through more applications and more contact with customers about their additional loans and get the queues down. It's reinvested into the same process with the same people; they're just spending their time not on drudgery but on value-added conversations. Senator DOLEGA: How has staff satisfaction been? Have you done any research as to staff who use AI compared to staff who don't use AI, as to how their satisfaction is? Mr Jermyn : Again, one of the things we at Westpac are very cognisant of is that we're Australia's oldest company. In this time of change where people, for a variety of very understandable reasons, are nervous about change, I think it's really important that Australia's oldest company is seen to lead and shows that it can, positively, in a way that brings everyone on that journey. One of the things we have done—to answer your question about staff—is to measure, as part of our regular all-purpose staff survey, a question on whether our people feel confident in their use of AI. In the most recent survey, that's gone from 72 per cent positive to 80 per cent, and that's across the entirety of the organisation—all 35,000 people. This isn't just technologists or people running product portfolios in head office. We want it to be at 100 per cent; that's why we continue to invest. But I would love to see comparisons of that figure repeated elsewhere in other industries. It's a thing we continue to invest in, but we are very proud of the work that Westpac's done and the work that our people do to serve our customers using AI. Senator DOLEGA: Thank you. I do have some other questions, but I'm happy to put them on notice. CHAIR: Senator Sheldon. Senator SHELDON: Thanks for joining us. In August—I think it was Mr McMullan, if I got this right from Cyber Daily—the chief AI officer— Mr Jermyn : Dr McMullan, my boss, the chief digital and data and AI officer. Senator SHELDON: Your boss—so you can really drop him in it here now! He said that AI bots deployed across mortgage and credit card assessment workflows were saving bankers an annualised 150,000 hours. This came a year after it was announced that 190 Westpac jobs would be offshored to the Philippines across teams including mortgage operations and customer solutions. In March this year, news.com similarly reported that another 100 jobs had been cut amid widespread offshoring. Now, AI saving hours and jobs being offshored are facts that don't sit comfortably with each other. Is it just a coincidence that you're offshoring jobs in the same team where you're heavily deploying AI, or is there a connection here? Mr Jermyn : I'm not across the specifics of those jobs in particular. What I will say is that we have 35,000 employees. I think in the last year we had 5,200 out—sorry, 5,600 out— Senator SHELDON: Before you go into that—I appreciate you're going to give me a broader picture—I ask specifically about these jobs, because they are a critical example. You could take it on notice. But I just might say—and I'm not reflecting on you, Mr Jermyn—that Westpac really should have somebody here who can answer these sorts of questions. They are important. They are very important to this committee— Mr Jermyn : I agree. Senator SHELDON: and to the community more generally. This is a social licence question. I'm not prejudging; I'm just saying there's a fear of coincidence. It's important that these questions can be answered very quickly. Mr Jermyn : I agree. I'm very happy to take that on notice, but what I will say is, in terms of the capability that we have deployed—absolutely not directly related to those jobs that you've spoken of but simply as a function of when we have deployed and tested the capability, but certainly hugely sensitive to these questions around employment—we see the application of AI is changing the tasks that people do, as it indeed does in the case that we described. The bankers are spending their time on different tasks. But we'll certainly come back with that. Senator SHELDON: The question then goes to AI and work, with AI being offshored more generally. What percentage of work do you see being offshored with AI related work? Obviously, there are new skill sets and there's new training required—or do you see that there could be a net increase of work coming back into Australia in the banking business? Mr Jermyn : Yes, I'm certainly optimistic for the latter, and there is actually evidence for that. We certainly don't see any requirement to offshore the work that we are doing in AI. We have not done that. Actually, in terms of the capability that we're delivering in the team, by and large, the new jobs that have been created are managerial roles and in our graduate program, which continues to increase. But with the broader skill base that exists around the world in AI, particularly in the US, we've actually taken steps to try to bring more of that capability into Australia. Andrew also recently announced the strategic partnership that we have done with a company called Amp Labs at Silicon Valley. The committee will know that a lot of the pioneers in AI are Australian, and traditionally a lot of those folks have gone to Silicon Valley and hold high-ranking jobs there. For the past decade or so, that's been quite a commonly worn path. With Amp Labs, we've created capability and a new entity here in Australia, with frontier engineers who are absolutely elite, from a variety of organisations such as Google and Block. They're Australian. They're working here now in new jobs created in Australia, supporting Westpac and also growing the local economy and the frontier of AI. Senator SHELDON: In the consultation with the workforce on the impact on work, reskilling and training, what formal processes does Westpac have across the business but also with individuals or groups of individuals in the business about the actual impact? What's the process that's followed? Can you give any live examples of what Westpac might consider a better-practice process? Mr Jermyn : I think we've provided something like 234 discrete training processes. I mentioned that one of the practices that we have is making sure that absolutely everybody in the entire organisation is enabled with AI, and there's a huge range of training available to them for that. This extends not just to, 'Here's a particular tool and here's how you use it.' We have leader led sessions out in the communities. Our branch staff are some of the most prolific users of AI. We share best practices across our communities, using our internal intranet. There are any number of stories that we share regularly. Certainly, in regional Australia, branch staff have supported customers using the tooling that's been created, and that creates a positive dividend for the positive adoption of AI and preparing our people to continue to do more of it. As I said, one of the things that I think probably distinguish us in this regard is that we haven't taken a mandate to AI, but we have provided the opportunity, and actually people from outside of technical domains have taken up that opportunity at disproportionately high rates. We'll continue to do that. Senator SHELDON: That jumps back to the question of not only the training—which is obviously important, and, where that's working, that should be congratulated—but also the consultation process about how the AI agents are being used and what would be better usages. To what degree is there staff engagement and consultation? One of the things you may have heard about from Mr Black from the BCA—and there have been a number of others over the week, and a number of unions are saying this—is the critical question of consultation with the workforce, not as a matter of tick and flick but as a matter of actual product improvement and better product understanding by both the company and the workforce. Mr Jermyn : Again, some of the examples that we've referenced already are precisely that. In the case of the consumer lending process—very similar to mortgages—the desire to do this and the actual business ownership and the sponsorship came from the bankers themselves, who are currently stuck doing a number of practices that are either tedious, manual or prone to error. So part of the core way that we've set up is to ensure that the mandate to use AI does not come from my division at all. Forgive me; that's why I'm not always across all of the details of every single use case. The lines of business and the people who are working in those teams who are affected are part of the process of devising what will work. So listening to our people about what our customers are telling us and divining how AI can help is a core tenet of what we do. We don't think about AI solutions and where we can place them. We think that's the best way to provide better customer outcomes and better service for our people too. Senator SHELDON: Thank you. CHAIR: I believe there are no further questions. Thank you very much for your time this afternoon. We really appreciate you making yourself available. If there's anything you've committed to providing on notice, please do so through the secretariat in the next two weeks..