rebuild our capacity and capacity
This was before the Royal Commission, before simplification became so ubiquitous – and long before anyone had heard of COVID-19.
“We’ve embraced the idea that, in an ever-changing world, the spoils belong to the nimble and the productive. That’s why speed and agility have been central to our strategy.”
NeoBanks were just an idea and FinTechs were just emerging as a serious proposition. The idea of BigTech taking over the bank was background noise.
In Australia, the big banks continued to hold around 80 percent market share with shareholder returns in the mid-1920s.
It all seems pretty rosy today, but the seeds of change and disruption were being sown.
In fact, we could already see massive forces fundamentally changing the banking industry forever – forces that would effectively lead to intense competition, lower revenues and reduced profitability for the industry.
Our customers now want a lot more for less: more self-service, more digital, more accessibility – but lower fees and charges.
Customers were also “trained”, particularly by the tech industry, not to accept the status quo and to expect constant innovation and improvement.
Under the spotlight of the Royal Commission in Australia, the community and regulators rightly wanted better: better behaviour, better products and services and greater accountability when things go wrong.
Last but not least, after years of traditional competition, the floodgates have been opened to this array of new competitive threats: BigTech, Fintech, Neobanks, New Payment systems, Crypto and By Now, Pay Later to name a few. some.
Adopt rhythm and agility
It was clear that the future was going to be very different. It was also very clear that ANZ was not in the best position to succeed. For example:
- We were undersized in Australian retail, but overexposed in institutional, lower margin and more capital intensive business.
- We had other businesses scattered across the region that were not producing adequate returns, but were tying up valuable capital and resources.
- We were also not as productive as we should have been and our technology was designed for another era.
It all sounds pretty bleak – and I can assure you it was – so we set about simplifying and reshaping our portfolio massively.
We’ve embraced the idea that, in an ever-changing world, the spoils belong to the nimble and productive. That’s why speed and agility have been at the heart of our strategy.
- We have sold nearly 30 non-essential businesses. And a lot of them were big companies, but we weren’t the best owner.
- We’ve scaled back and refocused Institutional to set it up for long-term success. It is now one of the best institutional banking firms in the world – just as tailwinds are emerging for this sector.
- And we’ve cut AU$1 billion in operating costs from the bank while introducing agile ways of working.
These actions freed up approximately A$15 billion of capital which was partly reinvested to build a better bank – notably in our retail business in Australia.
And that is the work that we are launching now, the work that we are doing to completely rebuild our capacity and capacity.