The path to transformation-Plus

At the launch of our new retail banking platform ANZ Plus last week, I had the opportunity to talk with our Group Executive for Australia Retail Maile Carnegie and Head of Salesforce for Australian, New Zealand and ASEAN Pip Marlow.

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We focused on the critical factors – technical and human – which will be necessary to take a large, established organisation into a world where the rules are being set by a whole new field of competitors and more discerning customers.

At ANZ we talk about the bank we're building. So it'll probably never be finished because things keep changing. We're going to constantly be building a better bank.” – Maile Carnegie

It was a wide-ranging and fascinating discussion about transformation, innovation, digital disruption and the value of partnerships. Below is an edited Q&A of the discussion.

SHAYNE ELLIOTT: What's great working with partners like yourself (Salesforce) and others is you bring this sort of global perspective. You get to see the good and the bad and the ugly. Some I know follow the tech industry pretty closely. For others though, Salesforce, what exactly does it do? Give a bit of insight into how Salesforce really creates value for customers.

PIP MARLOW: It's interesting. I've never asked this question of Marc (Benioff), our founder. I wonder if he ever regrets calling at Salesforce because the first product was really about how do you help companies sell to their customers. But really, what Salesforce does right now is it says, how do we help ANZ put the customer at the centre of every single touchpoint that they want to do in a way that helps you look after your customers better? That could be, as you talked about recruiting and bringing in a new customer. So how do I help you onboard a customer? How do I help you market to that customer? When something goes wrong, how do I manage that complaint? Or if you sold white goods, how do I manage somebody going out to your house and fixing your fridge? What are all the journeys from sales, marketing and servicing? Do we help you with that? How do we think about the analytics behind that? The predictive nature, the personalisation of marketing? It really looks at that 360 degree of a customer and helps companies like ANZ manage it in a way that is great for your customers and great for your company.

SHAYNE ELLIOTT: Maile, at ANZ we talk about the bank we're building. So it'll probably never be finished because things keep changing. We're going to constantly be building a better bank. When we started on this journey, we recognised that we can't do everything on our own. And that's part of the reason we've got ourselves into difficulty in the past. Can you talk to the importance of partnering and what does it really mean? Because we can say we partner with all sorts of people. And again, why Salesforce? And what does it mean that they're a partner of ours?

MAILE CARNEGIE: I'm actually going to build off the first question you asked Pip because when I was looking to join an Australian company, one of the filters I had was one that I thought was set up to win in the future. And a key filter for that was whether or not they understood and were actually good at partnering. Because when you look at the companies that win and that are going to win in the future, they recognise they can't do everything themselves. The days of: “OK we can build everything, do everything”, they're kind of gone. And so if you can't partner well, I think your chances of being successful are rapidly diminishing. So I found ANZ really intriguing and was it attracted to it because I sat on the other side of the table as a partner and there was a very material difference between interacting with ANZ and other people who used to call us vendors in the market. It's really quite deeply ingrained in ANZ's culture to try and be a good partner. And so again, that's one of the reasons I joined. But when I think about how we try and treat our partners. One, we do call them partners and we very much try and treat them like they are part of the family. What does that tangibly mean? Well, on the ANZx program they are invited to both the design discussions as well as the build. Now that doesn't sound like it's a big idea, but actually for a number of our peers both inside and outside the industry, they do not want their partners to be part of the design. They purely want to give them tasks to do, whereas we're like, "no, actually, we think that if we've chosen you, it's because your best of breed. We love what you can bring to the table. We want you in both the design and the build.” It's other symbolic things like, when we have our monthly awards, we give a proportional number of awards to the partners in the team as we do our own employees. Things like when we got our beta out, we had what we called the "beta breather" day, where we gave everyone on ANZx the day off. And we called up our partners and said, "we're going to give out our full-time employees the day off and we'd really love it if the people working on the program could also get the day off”. So we try and treat them very much like they're part of the family. And one of the first questions I always ask people like Pip and I actually met with some of your team today. The first question I asked them is: "how are your people feeling? Are they enjoying working on the program?" Because in my mind, being a great partner means we can attract and retain, not just the best full-time employees, but we can attract the best people working in our partners. And that is a real differentiator. When you've got the best people from Salesforce, the best people from Google, the best people from Twilio. When they're actually embedded and enjoying the work, you just get much better outcomes.


SHAYNE ELLIOTT: It actually came up when I was CFO, actually. At the time we spent $9 billion running the bank. About $4.5 billion of that was salaries. About $1 billion was depreciation. And the rest we were paying to vendors who were supplying stuff. And when we're talking about cultural change. I said, "these people are in our building every day. They're running the business with us. What they say and do actually matters a lot. And if they're not with us, we're going to have a problem". We figured out a big chunk of the sped was with about 50 partners. And so we said we'd better treat these people like partners. And that was about seven or eight years ago. Now Pip, part of the benefit that you bring is that insight. You get to deal with people all over the world. You get to see good, bad and indifferent. Everybody's doing a digital transformation today, or so it appears. What are some of the signs that make a successful transformation in your mind? And similarly what are some of the warning signs when things go wrong?

PIP MARLOW: They are actually probably connected, the polarity of the two points. I think the first thing that drives great transformation is it's customer led. It is what is the job to be done for your customer? Not what technology you use or which division is better or not better within an organisation. So it's customer led and what you're trying to do for your customer drives that transformation. Which then means silos don't win out. When it doesn't work, is that in the organisation there are silos and everybody wants to do it for their part of the business. And in your world that would be, maybe home loans are more important than savings accounts, or retail is more important than institutional. Actually when it's customer led and the silos don't win, but the customer wins. I see really strong foundations for a transformation that serves customers regardless of the point that they're interacting with the bank and it gets everybody behind that. So that's one. The second one is in seeking to deliver on the job the customer needs to be done, is if you have a better analogue experience today and you digitise that, you will just have a bad digital experience. So the organisations that take the time to reimagine what needs to occur in a digital mobile-first world and deliver to that, because you talked about where customers are. Most customers really don't want to go into a bank branch for a lot of things. They want to be able to do it online. And if you're still building from those other experiences, it's still suboptimal or breaks the digital journey. There are times in that journey you might need to go into a different channel. So when you've reimagine that in a digital mobile-first world, that drives great outcomes. But if you don't stop to do that, by the time you launch something, it actually doesn't do what you want it to do. And the last thing I'd say is, you've used the word legacy a few times. The worst thing you can do is have a legacy model now and then just go and build a new legacy model. It's like repeating the sins of the past. So the best transformations are not about coming out with a quick artefact that looks really sexy. I've just launched this and I've solved one problem. And whilst that might be really launchable and great on the day, it's not sustainable for the long term. So you've actually taken the time to say, what are the foundations I need to put in place to ensure I'm not building legacy systems, that I'm taking a platform approach. Which doesn't necessarily mean you're locked into one particular partner. Platforms can be ecosystems that allow you to be agile, to scale and to adapt as the market adapts. But if you get that right, then you have a platform for ongoing innovation and transformation, not a quick fix or a pretty launch of a widget.

SHAYNE ELLIOTT: Maile, can you talk a little bit more about that capability we're building and to that point, our thinking about how we make it sustainable?

MAILE CARNEGIE: Absolutely. Just building off some of the comments that Pip just made. We have very, very deliberately made sure that what we built is cloud enabled. Pretty much everything we've built, whether it's with a partner or native or bespoke, has been cloud enabled. It's all been API enabled and it's modular. And I know that sounds all very tech speak. But really the objective of it is to make sure that what we build is sustainable. Meaning that if something is not working, when it's modular, you can just take that one piece out. You don't have an integrated, cumbersome stack. So if one bit’s not working, you're stuck with it. We literally can pull bits and pieces out.

SHAYNE ELLIOTT: Just to interrupt there. It's fair to say that we've already made some of those decisions in terms of the build. We’ve already changed. Our original partner list is different than the one we have today because we unplugged some of them and plugged others in.

MAILE CARNEGIE: When we started, Salesforce wasn't on that initial partner list. And when we started really deeply exploring what we needed and what our customer needed, we figured out that Salesforce was going to be a much better partner for us. And we did, we were able to unplug where we were heading and put Salesforce in. And it just is much more flexible and agile.

SHAYNE ELLIOTT: The other one that you talked about the risk of this "silo mentality" and not putting the customer first. To some extent, we created a potential silo when we created this thing called ANZx. It started with half a dozen people, but we consciously put you in a different building across the road and we built a new team. There were some risks with that, do you want to talk through how we didn't create this silo problem.

MAILE CARNEGIE: One of the really important things was getting the mix right. We are trying to get the mix between people who have worked in the bank a long time, so they understand ANZ. They know some of our existing systems and processes and technology. They've got the relationships. So where we can, we're trying to find a really good blend between existing ANZ people as well as people from outside. And we try and keep that split to be about 50:50 and that's pretty much where we are. That provides a lot of connective tissue back into the mothership. I think the other thing that's really important is because we're not building a completely different greenfield business. It is actually highly connected into the ANZ systems and processes. That also creates a huge amount of connective tissue. We get a lot of help and support and work from our technology team within the bank. They do a lot of work for us on the program. One of things that we've done is hollow out our core technology system. That required us to unplug from things like Treasury and accounting. So there is a huge amount of connectivity back into the bank. Which means that even if we wanted to, we couldn't be a silo. It's that real combination. The other thing is that we do have forums where, Gerard (Florian) our ahead of technology and our head of risk (Kevin Corbally). They all come together to work and put their hands on the tools to work on the program, versus it just being myself or Shayne.

SHAYNE ELLIOTT: Just to finish up, going back to that benefit you get at Salesforce with global insight. There is all this talk at the moment about the tech, the ongoing revolution in particular here in Australia, it seems really an exciting place. There's lots of innovation, lots of new companies, lots of unicorns, etc. Is that real from your perspective? How do you think Australia, New Zealand and our part of the world is faring in a global context and opportunity?

PIP MARLOW: I think Australia is faring much better now than it used to, candidly. I think historically innovation here, we've been quite conservative around innovation or connecting into academia. We didn't commercialise research very well. We didn't connect up different parts of that innovation ecosystem. In some ways, while I don't wish COVID on anyone, these last two years required Australia to tap into its best natural resource – not what you pull out of the ground but who walks on it. I've seen a real shift in that. I've seen a lot more activity in the start-up space than ever before and I see us thinking about how we play on the global stage. So I think it's great. I think innovation feels like it's no longer as much of a dirty word maybe as it used to be. It's now seen as can we make this part of our competitive advantage in industries like yours and companies like yours. And more large companies looking in the mirror and saying, "I better transform". You've faced it with fintechs. Every industry is facing a type of competition that they didn't before. And if you don't innovate, if you don't transform then your competitors or your start-ups will.

SHAYNE ELLIOTT: Agreed. We have this firm belief that in the world of constant change, only the nimble will survive and do well and that's really at the heart of what we're doing. Not just in ANZ Plus but across the board. Thank you very much. Thank you for the partnership with Salesforce and long may it last. Thank you Maile for leading the team and Peter for getting us to where we are today.

Shayne Elliott is Chief Executive Officer of ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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