This was before the Royal Commission, before simplification became so ubiquitous - and well before anybody had heard of COVID-19.
“We embraced the idea that, in a world of constant change, the spoils go to the nimble and productive. That’s why unlocking pace and agility has been at the heart of our strategy.”
NeoBanks were just an idea and FinTechs were only just emerging as a serious proposition. The idea of BigTech taking over banking was a background rumble.
In Australia, the major banks continued to hold around 80 per cent market share with returns on shareholder investment in the mid-teens.
That all sounds pretty rosy today but the seeds of change and disruption were being sown.
In fact, we could already see massive forces fundamentally changing banking forever – forces that would effectively lead to intense competition, less revenue and reduced profitability for the sector.
Our customers now want far more for less: more self-service, more digital, more accessibility - but lower fees and charges.
Customers were also being “trained”, particularly by the tech industry, not to accept the status quo and to expect constant innovation and improvement.
With the harsh spotlight of the Royal Commission in Australia, the community and regulators quite rightly wanted better: better behaviour, better products and services and greater accountability when things go wrong.
Finally, but not least, after years of traditional competition, the floodgates were being opened to that array of new competitive threats: BigTech, Fintech, Neobanks, New Payment systems, Crypto and Buy Now, Pay Later to name just a few.
Embracing pace and agility
It was clear the future was going to be very different. It was also very clear ANZ was not in the best position to succeed. For example:
- We were sub-scale in Australian retail but over exposed in Institutional, a lower margin and more capital-intensive business.
- We had other businesses scattered through the region not producing adequate returns but taking up valuable capital and resources.
- We were also not as productive as we needed to be and our technology was built for a different time.
That all sounds pretty grim - and I can assure you it was – so we set about massively simplifying and reshaping our portfolio.
We embraced the idea that, in a world of constant change, the spoils go to the nimble and productive. That’s why unlocking pace and agility has been at the heart of our strategy.
- We’ve sold almost 30 non-core businesses. And many of these were great businesses but we were not the best owner.
- We shrank and refocused Institutional to set it up for long term success. It’s now one of the best Institutional banking businesses in the world - just as tailwinds are emerging for that sector.
- And we took out $A1 billion dollars in run-the-bank costs while also introducing agile ways of working.
These actions released around $A15 billion dollars of capital which was partly re-invested to build a better bank - most notably in our Australia Retail business.
And that is the work we are now launching, the work we are doing to completely rebuild our capability and capacity.