Retired Officers’ Club 2013 Christmas Luncheon
– 12 December 2013
CEO Australia Phil Chronican
Good afternoon, thank you for joining us today.
I would like to acknowledge two past ANZ CEO’s, Will Bailey and Don Mercer, former Managing Director Charles Rennie – who turned 100 this year - and several past senior leaders who are with us today.
Mike Smith and Graham Hodges are disappointed they couldn’t join us, but have asked me to pass on to you and your families their best wishes for the festive season ahead.
I’m delighted to be addressing the Retired Officers Club for the second time.
Today, I would like to update you on a topic I have been talking about quite a bit recently at external presentations and with analysts and media - the future of banking in the digital age.
Nothing is as constant as change and banking is certainly no exception to this rule, something I don’t need to tell this group. Today, it’s rapid changes in technology that’s shifting the goal posts and challenging the way we do things at ANZ.
I’d like to give you a snapshot of how these changes are impacting the way consumers want to interact with companies and what this means for banks.
Then, I’d like to update you on Banking on Australia – ANZ’s plan to transform and reshape the way we do business in Australia, to help us embrace the next era of banking and meet the changing needs of our customers.
The digital revolution
You may remember Roy Amara, researcher, scientist and past President of the Institute for the Future, who is credited with what is known as Amara’s law:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
The internet is an outstanding example. As household access to the internet took off in the 1990s, hundreds of businesses were formed to take advantage of this new technology.
Most of them failed to live up to their founders’ vision and we all witnessed the “Dot Com” boom and bust.
Now over a decade has passed and the world is being transformed in ways that Silicon Valley couldn’t have dreamt about in 1999.
What has allowed the internet to be so revolutionary is a combination of a number of technology related changes:
Much greater bandwidth available at lower and lower prices
The growth in mobile data capability and widespread use of Wi-Fi
Increased analytical capability allowing customer specific analytics
Widespread access to the Global Positioning System network, allowing location specific services
A massive and ongoing uplift in the number of internet enabled devices.
Today, there are around 12 billion devices that are able to be connected to the internet. This includes traditional wired computers, as well as smart phones and tablets. Cisco estimates this number will increase four-fold over the next seven years as we find more and more uses for tools and appliances to leverage the communications capabilities of the internet.
We’ve already seen industries being transformed – and disappearing! – and new opportunities presenting themselves as a result of this revolution.
The entire music industry had been organised around the economics of physical distribution, however, Internet distribution of songs, videos, movies and TV shows led to the collapse of the traditional music store industry.
The Google Now service combines information that Google knows about you from your device as well as your search and location history to automatically suggest information you may need. Arrive at an airport in a new city and Google Now can automatically offer directions to hotels you searched on Google the week before.
The banking industry is not exempt from these changes and it quickly became clear that our customers expected us to embrace and adapt to the digital world.
So, when we launched the Banking on Australia program last year, it was grounded in our view that digital and mobile technologies would continue to grow in importance for both banks and our customers.
If anything, the past twelve months have just reinforced how powerful this trend is.
The “Age of the Customer” and what it means for banks
Although customers’ banking needs remain relatively constant, technology is changing the way they want to interact with their bank. Our customers have told us they expect to grow their usage of digital banking channels in the future, with the largest growth in tablet and mobile.
External sources show that by 2015, digital will be the preferred channel for simple product origination.
Customers who regularly use digital and online banking options generate more revenue and are less likely to switch banks. A recent Google study found that two in five mobile users will turn to a competitor’s site if their bank is not mobile-optimised.
The case for digital banking is clear.
Banking on Australia is our response to this changing world
Twelve months ago we launched Banking on Australia, to reshape the way we do business in response to the technology transformation taking place around the world and changing customer preferences.
A significant part of the program is the investment we’re making in our digital capability – and we’ve made good progress: ANZ goMoney – has grown dramatically in 12 months.
We’ve conducted a significant number of real-time chats with customers researching our home loan pages on anz.com via ANZ Live Chat – the conversion rate has been encouraging.
Many small business customers are now being paid ‘on the go’ with our merchant app, FastPay while Institutional and Corporate & Commercial user groups are managing cash transactions on the go with ANZ Transactive for mobile.
We’re deepening customer reach and loyalty with our mobile and digital banking and we have seen a 19% increase in sales via digital channels.
Digital is not an ‘either/or’
However, digital is not an ‘either/or’. Despite the popularity of digital services, customers continue to interact with banks across all channels – while digital is critical for more routine transactions, customers tend to prefer face-to-face for life’s big decisions.
Our customers don’t think of channels. They expect a seamless, personal experience at every touch point - regardless of whether they choose to interact with us online today and in a branch tomorrow.
So a key element of Banking on Australia is also about transforming our distribution channels, simplifying our processes and giving our people access to insights, tools and training to free them up to spend more time with customers having the right conversations.
We’ve invested thousands of hours into training our frontline staff (Retail and C&CB) to focus on more complex customer needs and have introduced new-look sales-focused branches and video conference facilities. As a result, branch sales have increased in 2013, despite experiencing falls in branch traffic.
Smart ATMs are now up and running with increased functionality in selected locations , enabling more customers to ‘self serve’ simple transactions such as cheque deposits.
In our Corporate and Commercial business we’ve deployed mobile tablets to our front line bankers, featuring new apps to bring the whole of ANZ’s capabilities to our customers. Our bankers have also received super regional training, supporting a significant increase in cross border referrals from Australia.
ANZ was also recently recognised by the Corporate Executive Board for leading the way in mobile relationship banking as a result of our iPad strategy. A new Business Response Team is giving our Corporate & Commercial frontline bankers more time to spend in the market with customers writing business and ensuring a customer’s experience with us is easier and consistent.
Underpinning these initiatives is a continuing focus on improving our operations to ensure a seamless, faster and more efficient customer experience at every customer touch point. Our Operations teams have absorbed hours of frontline work, giving our frontline people (in our Retail and Corporate & Commercial businesses) more time to spend with customers.
We’ve introduced new workflow tools to reduce manual work, automate tasks, and improve reporting and analytics – resulting in improved customer turnaround times.
We’ve reduced Retail customer complaints by 11%, beating our target of 10% for 2013.
Banking on Australia is translating into good financial performance
Banking on Australia is helping us to position ANZ for growth in a changing environment and embracing the next era of banking by building a business that’s:
connected through mobile and digital channels;
delivers a customer and staff experience that’s easy and insightful; and
helps us bring the whole of ANZ to our customers.
This is flowing into our financial performance, helping us acquire and retain more customers and deepen our relationships with them. Examples:
We’re lowering cost to serve - we reduced costs in our Retail business during the year - while freeing up our frontline staff to focus on more complex, value-add conversations.
We’ve grown our home loans faster than the market for the past 14 quarters and delivered an increase in branch home loan sales, we increased the number of Wealth products sold through our retail distribution network by 19% and welcomed many new Corporate and Commercial customers. Lending growth has grown faster than the market for the past 6 quarters.
Our Corporate & Commercial frontline bankers generated substantial cross-sell revenue through the sale of Institutional, Retail and Wealth products to business customers.
Banking on Australia is engaging our people
The investment in Banking on Australia has also been incredibly motivating for ANZ’s people, mobilising them around a clear vision of the future for ANZ in Australia and providing a strong link between the transformation we’re undergoing and the Group’s super regional strategy:
So, we have been busy at ANZ in the past year and I hope my address today has given you a good sense of how we’re taking on the challenges of the future, just as you all helped ANZ navigate significant changes in the past.
With Christmas around the corner, there is only one thing left to do – on behalf of ANZ’s Management Board, I would like to wish you and your families a Merry Christmas and the very best for 2014.
Phil Chronican CEO Australia