Published on the 02/11/2018 | Written by Heather Wright
Only the agile will survive in new world of banking says ANZ boss...
New business models – and a new culture – will be critical for Australian banks to survive and thrive in the future, according to ANZ Bank chief executive Shayne Elliott.
Speaking at SWIFT’s recent Sibos financial industry conference in Sydney, Elliott warned of the threat of digitisation to the universal banking model and said agility was crucial.
He says Australian banks have had it easy, with 30 years of uninterrupted growth which can breed complacency.
“We need to wake up to the fact that that strategy of the past is not going to work in the future.”
“We need to wake up to the fact that that strategy of the past is not going to work in the future. We need to shift and we need to shift quickly. We need to do it safely, but we need to do it fast. That’s the big challenge for banks operating in Australia today, big or small,” he says.
“The banks that survive will be those who are agile, that can move at pace, that can respond to changing customer needs.”
Elliott says the move to open up data through open banking, along with new technologies around big data, throws into doubt the universal banking model of being all things to you customer. Also casting shadows on that model is the increasing complexity and costs, be it compliance costs or the general cost of having lots of things to do well.
“We think the only way to win in the future is to do a few things and do them really, really well,” he says.
It’s a situation which has banks grappling with what will be their source of competitive advantage, with Elliott saying some will specialise vertically, some horizontally, with partnering also becoming an increasing part of the banking business model.
“We have been partnering for a long, long time,” he says, citing SWIFT as an example. “[But] it’s been largely in the background. We need to bring those skills to the forefront, from a customer experience point of view, bundling services and product at the front that may not necessarily be manufactured by us.
“We are choosing that path at ANZ and it goes back to that philosophy of chose a few things to do, do them well and partner with other people to round out services to customers.”
But it’s the combination of Australia’s New Payments Platform – something Elliott dubbed exciting for Australia but ‘not terribly innovative’ in the global scheme of things, with around 40 other markets having similar offerings – and open banking that will create an explosion of new businesses, new business models, new revenue streams and new customer experiences.
“We make look back at a future Sibos and say that was the seed point which drove a differentiation in our industry, and you will start to see different kinds of banks happening,” he says.
“Banks will look less and less alike.”
Elliott also noted the impact of the Royal Commission into the banking sector, and its assessment of ‘where our industry has failed’.
“We have a lot of work to do [on that front] and at the same time we are confronted with the challenges and massive opportunities about the transformation happening in our industry.
“The challenge for us is grappling with both – dealing with the very legitimate issues of the past and making the cultural changes necessary and then really embracing the need to transform for the new economy.
“I happen to be in the camp that says those two things are really aligned and we can achieve both by keeping those aligned and [focusing on] improving our customer experience.”