One in five active retail customers is on the new platform, and from 2027, new customers will be allowed to open only an ANZ Plus account, chief executive Shayne Elliott told analysts last week.
Loading
It’s a mammoth undertaking.
Bank watchers are commending Carnegie, a former managing director of Google Australia who is seen as a possible leadership contender for when Elliott steps down, for shepherding the project as well as overseeing the retail arm in what is considered an institutional bank. But they are itching for those shareholder returns.
It may be too soon to expect a financial pay-off for ANZ Plus. After all, Commonwealth Bank of Australia, which is the leader in the technology space, started its big tech investment almost two decades ago and updated its core platforms a decade ago.
Therein lies the problem for ANZ, a laggard in tech spending as well as in its retail division, which reported a net interest margin of 1.91 per cent in the 2024 financial year. Like all the other majors, ANZ’s retail profits are being squeezed by the intense mortgage competition.
MST Financial senior research analyst Brian Johnson says when banks undergo big tech transformations, they are always going to turn out more complex and cumbersome than anticipated.
“Inevitably, they’re going to cost more and it takes a lot longer than you think,” Johnson says. “You can make everything look good at the front end, but running the duplicated system at the back end is where the problem is. Porting from one system to the other is more difficult than you think. And it’s hard to think CommBank just won’t dial forward.”
ANZ’s group executive for Australian retail banking Maile Carnegie with chief executive Shayne Elliott at the launch of ANZ Plus in March 2022. Credit: Louise Kennerley
By the time Plus is fully functional in four years’ time, CBA is likely to be miles ahead, while NAB – and to a lesser degree Westpac – should have also leapt forward.
Carnegie has to ensure migrating existing customers onto the platform, while also retaining the new Suncorp customers, will be seamless, and the new platform will be comparable – even better than what the other banks are doing. The retail boss is confident she can deliver.
“We’ve gone around the world and looked at what are some of the biggest customer pain points associated with a migration, and we are making a choice to engineer as many of those pain points out as possible,” Carnegie says.
Loading
“No one wants to have to rebuild their debit [accounts]. No one wants to have to go back to their employer and give them new details about bank accounts they put their salary into. So we’ve got a list of those customer pain points, and we are choosing to engineer them out, so customers do not need to do them as they are migrating over.”
Alphinity principal Andrew Martin, who attended the launch more than two years ago, describes the project as ambitious and bold but necessary if ANZ wants its retail arm to survive.
“ANZ’s view is ‘we can sit here and be inefficient in an operating cost sense, or we can try something different and try to take the lead from an efficiency point of view’,” Martin says. “They’re trying to differentiate themselves from other big banks in the way they’re going on about it.”
In a note to investors, Morgan Stanley analysts describe the period ahead for ANZ as “pivotal”. They say management was very upbeat about the potential benefits of ANZ Plus. “We believe migration and integration costs will be higher in the near term and meaningful financial benefits won’t emerge before FY27,” they wrote.
But as banks wrestle between their dual identities of being tech companies and financial institutions, and as they compete for a market of 25 million Australians, ANZ has no choice but to put its eggs into the Plus basket.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
