ANZ’s ‘win-win’ approach to big tech players
ANZ CEO Shayne Elliott on partnerships, competitors and being a ‘trusted spine’ in a world where banks have the trust of consumers despite large technology companies rapidly closing the gap on this traditional incumbent advantage.
Speaking at a recent RFi Group / AB+F roundtable in Melbourne, Elliott acknowledged that some of his peers weren’t pleased by the ANZ partnership with Apple Pay but added that it had been an easy operational decision.
“We took a really simple view there and I think we will do it the same with others; well our customers want it,” he said. “Actually, our customers want it and it’s better than anything we can do on our own. Simple. We just have to figure out how to make it better.”
But does he see these sorts of partnering arrangements as a long-term point of difference between ANZ and the other major banks?
“We think that’s really core to our strategy in terms of the way forward. In order to participate in that whole value chain, it’s unlikely that we can do that on our own,” he said.
“I’m not going to be able to build a search engine to help people find a home. Well I could, but it’s unlikely I’m very good at it! So we should partner with people who are the best at that. Our business is to say, we’re kind of the spine that holds it all together.”
Elliott reiterated the earlier point that ANZ is looking to keep things simple.
“In banking, we only do two things: we move money for people, and we do borrowing and lending. We should do those things really, really well. For example, payments – we should be really good at that, moving money from A to B,” he said.
“However, the ancillary services – life insurance, share trading, general insurance, accounting — we’re not going to be the best at those, but we should partner with people who are really good at that and make it just intuitively easy to do it at ANZ.”
Apple Pay partnership
On the Apple Pay partnership, Elliott said ANZ had received a “huge boost” from the deal and that customers were still converting onto Apple Pay at a “significant rate”.
“The customer experience is great; people love it. What happens is they don’t get bored with it, so they start converting more and more and more. They get used to it,” he said.
“It’s only been a year and three months (the partnership was announced in April 2016) but the early data says that the people who have come onboard and used Apple Pay have gone on to have a deeper relationship with ANZ. So they typically buy more things from us – deposits, other products. So that’s been a good proof point.”
Elliott confirmed that ANZ currently spends about $4 billion per year on what could loosely be described as ‘suppliers’ – money that goes outside the bank to somebody else. That is spread across roughly 8,000 suppliers with about half that money, around $2 billion, going to 42 partners.
“And you can kind of guess who they are; a lot are big tech firms,” said Elliott. “These are some of the world’s best companies, in all sorts of fields, and they operate in all sorts of jurisdictions.
“Actually, the intellectual capital these firms have is much more valuable to us than the financial capital. We need to make sure we’re the best people to work with, so that we get their best teams. They don’t give us their B or C teams; they give us their best because at ANZ we treat them better.
“We involve them, they are part of the strategy, we partner with them. We look for mutual things. So that’s a really important piece of the puzzle for us.”
But these partners are also potential competitors, so at what point does ANZ move from partnering with someone like Alibaba, Amazon or Apple to considering them a genuinely serious competitor in the local banking sector?
“We live in a world where banking here is pretty attractive. And Australia is big enough. Even for Amazon to come here tells you it’s big enough and the margins are worthwhile enough to bother. There’s probably a bunch of countries where they’re not going to get to for some period of time,” said Elliott.
“I don’t necessarily buy the argument that all of these people really desperately want to get into banking in Australia. I think it’s the last thing they want to get into and be subject to regulation and whatever. I think they want to be in the value chain, they want to be involved, and so I think they actually want to partner as well. That’s our view. That’s why we’re saying there’s a win-win here.”
For the first part of the Shayne Elliott interview, click here.