When ANZ Bank took 23 executives – including its entire board – to the innovation powerhouses of San Francisco and Silicon Valley in June, they returned with mixed impressions of what they saw.
On one hand, the start-up culture with its agile mindset and no fear of failure gave the executives food for thought.
“It was a real eye-opener for me to experience some of the cultures in those organisations,” group chief human resources officer Susie Babani said in a recent presentation.
“Some of the things that I was thinking about [how] to translate into the bank is the whole test-fail-learn attitude and approach and the agility that requires.
“We tend to be much more long-term in our thinking, [whereas] we have to be an organisation that has a culture of taking risks and where failure is OK. And I’m certainly not going to say that’s the culture we have in the organisation at the moment, but we need to change that.”
One thing ANZ is less convinced about is whether some of those flagged as leaders in the digitisation space are really that far ahead of their international counterparts.
“We’re seeing banks like BBVA and Wells Fargo … reimagine their processes and the way they operate, and I think that’s a challenge for us,” ANZ Australia CEO Mark Whelan said.
“The other side of the ledger - we pressed them a little bit on this and we didn’t get a great answer back which means to me they haven’t nailed it - is that we’ve been doing a lot in the front-end in digital in our space, whether it’s around transactions, credit cards, mobile payments, and they’ve been doing the same.
“Where banks have failed traditionally right across the board is around taking digitisation or automation better right through the organisation – the processes and our middle through back office, and embedding that.
“There’s a big opportunity there for us I think and I don’t think anyone’s really nailed it that well necessarily across the board."
While banks – like other large organisations – are naturally keeping tabs on digital disruption, they also have a significant financial incentive to do so.
Last year, Macquarie’s banking analysts warned “up to $27 billion is under threat” from emerging digital players in the financial space.
The analysts believed digital disruption would spark a form of ‘IT arms race’ among banks as they scrambled to update and transform systems to cope with emerging threats – and they said ANZ and Westpac “have the most work to do to catch up”.
ANZ is in the midst of a $1.5 billion transformation and is also among several banks investing heavily in fintech start-ups as a way to gain visibility into disruptive business models.
Westpac pushed further into the space this week by increasing its annual investment spending by $200 million to $1.3 billion. Much of it is to be poured into the bank’s digitisation initiatives.
CEO Brian Hartzer said the bank would be “concentrating our spend on technology, on digital, on simplification, as we hone our focus on service.”
"By investing in digital, we can use technology to redesign the customer experience, making things simpler, easier and better for our customers and our people,” Hartzer said.
"This includes the development of a customer service hub to give the group one view of the customer and the ability to look at their needs and opportunities across the entire banking and wealth spectrum.
"Banking is undergoing a transformational change. The measures we have outlined will deliver a step change in the service we provide to customers, while at the same time improving our efficiency and productivity.”