A digital backbone for our global network

Cost of capital

Today the division’s return on equity has doubled to 14 per cent. We are focused on just 6,300 customers of high credit quality, with the dual benefit of reducing capital consumed and the risk of credit losses.

Return on risk weighted assets is now more than double that of 2016 at 1.59 per cent. Our product mix is more balanced, with revenue generated evenly across lending, transaction banking and markets. Importantly, the returns on lending is at or above the cost of capital.

Our international network has reduced capital and expenses significantly and we have invested in global technology platforms over the past seven years, significantly simplifying the tech stack.

The business today is very different and is well positioned to maintain strong returns. This was achieved by consistently sticking to the core elements of our strategy.

We have concentrated our efforts on high-quality customers who value our services and network and we’ve developed long term and deep relationships with these customers.

We focus on priority sectors with the highest return and growth prospects, namely financial institutions, technology, resources, energy and infrastructure, food, beverage and agriculture and sustainability. And our geographic network, particularly our access to Asian markets, gives us a unique competitive advantage.

We had to make our international network fit-for-purpose and improved its performance. We revised and determined a capital allocation and return expectations for each country.

Next, we simplified our technology and introduced integrated systems across our global network. This has improved customer experience and has allowed us to embed automation and provide clean data for more effective insights.

The importance of the investment in new technology cannot be overstated. Over the past seven years we spent $1.2 billion on this technology in Institutional. We simplified the network and created single platforms that are integrated globally.

Digital backbone

One global transaction banking system, one customer onboarding system, one global loan system, one global trade system, one cash management platform, one markets platform and one customer service platform.

We’ve been deliberate and thoughtful in this technology spend. Most of the solutions were developed inhouse, partnering with external vendors when it helps us achieve scale.

We call this new integrated system our “digital backbone”. It is a differentiator and has allowed us to offer a consistent customer experience across all our 29 markets.

This digital backbone is in place in 10 markets and will be rolled out to all our locations by the end of 2025. It provides real-time data used for enhanced risk management, regulatory reporting, customer revenue generation and significant automation opportunities across PCM, debt capital markets and loans.

We see more growth in PCM, markets and trade and loans. And we’re confident the division will provide sustainable returns over the long term.

We’re confident due to the quality of our customer base – deep, long-term relationships with customers that span decades and who we bank across multiple jurisdictions, particularly in the PCM business.

Also, our customers understand the value our network which is unmatched by domestic banks. And our international counterparts can’t match our strong base in Australia or New Zealand.

Our reach across 29 markets and with growth engines like the PCM business, the outlook for the Institutional division remains strong.

Mark Whelan is the Group Executive for Institutional at ANZ

This article is an edited extract of a presentation Mark Whelan gave to analysts on 7 September.