Tech changes bring $100m+ win for ANZ

Published on the 15/05/2024 | Written by Heather Wright

Tech changes bring $100m+ win for ANZ

But productivity key, boss says…

ANZ Group says technology simplification has saved it $62 million in the past six months, as it migrates apps to the cloud, consolidates vendors and automates engineering processes.

Digitisation enabling self-service adoption and automation of messaging interactions has also brought in $36 million in savings, with the bank also celebrating $1.5 billion of effective cumulative per annum benefits from productivity since 2019.

“3,000 engineers are using generative AI co-pilot tools to rewrite bank software.”

ANZ’s half year results, which cover the period to the end of March, highlighted the bank’s technology simplification and investment in automation and digital channels.

It has set a priority for FY24 of investing to build and sustain contemporary digital capabilities, alongside improving productivity.

While Australia and New Zealand have long had woeful productivity ratings, ANZ seems to be pushing against that.

Chief executive Shayne Elliott says productivity is ‘an ongoing discipline for us’ with none of the investment and growth possible without productivity. Some of those productivity benefits were used to fund an upgrade of its New Zealand core banking platform.

He says ANZ has lifted productivity by 13 percent in the half year, and cites the example of 3,000 engineers using generative AI co-pilot tools to rewrite bank software, delivering material gains and engineering productivity.

Automation has also been leveraged to re-engineer processing in Australian home loans, improving productivity by 13 percent.

Automation was credited with helping achieve a $15 million reduction in banking services and transaction processing costs, through automation of customer onboarding and home loan process automation. Improved workflow and decision making and system rationalisation also contributed to the savings.

AI, meanwhile, has also been playing a part: The organisation says it developed a ‘world first” AI transaction scoring capability for its retail and small business customers, which enables it to identify customers at risk of distress around 40 days earlier ‘so we can get customers back on their feet more quickly’.

“The number of customers in hardship rose this half, and whilst still lower than it has been in the past, it’s extremely distressing for each of them, and we expect that number to rise further as cost-of-living bites harder and unemployment likely increases,” Elliott says.

A generative AI tool is also being piloted to ‘radically’ reduce the time to compare, contrast and harmonise thousands of terms, conditions, procedures, policies and contracts for the acquisition of Suncorp’s banking business, which was approved by the Australian Competition Tribunal earlier this year after initially being opposed by the ACCC.

Elliott says the tool will accelerate and de-risk integration of the businesses. The acquisition of Suncorp is expected to be finalised in August.

Generative AI is also being explored and piloted across the bank’s ANZ Plus digital banking service in an effort to provide better tools to manage money, resolve inquiries, provide property valuations and detect fraud.

While there was plenty of new technology work underway during the half, simplification of technology was also a key focus. The bank says 48 percent of its targeted applications are now hosted in the cloud. That’s up from 37 percent a year ago.

Farhan Faruqui, ANZ CFO, says as apps are migrated to cloud the shutdown of systems and applications on premise results in productivity benefits. Elliott says while there’s the technology benefit in the move to the cloud, the biggest benefit goes into the business.

“As a result of being in the cloud, they can deliver more quickly, more efficiently, etc.

“One of the things we talk about at management is making sure that when you’ve got those situations, you spend in one area for the benefit elsewhere. We’ve got much, much better at ensuring that those benefits are getting delivered.”

“Productivity is improving customers’ experience, allowing them to engage with us via their channel of choice,” Faruqui says.

Close to one million conversations on the Australian retail front were taken via the Message Us capability during the six month period – an increase of 58 percent. Forty percent of those conversations didn’t require any banker support.

“Digital origination of transaction accounts increased 35 percent year on year. It is this continued focus on productivity that allows us to invest in our strategic initiatives and drives business growth and momentum.”

ANZ’s report shows digital payments were up seven percent on last year, with NPP (New payments platform) Agency payments up 20 percent.

Elliott says payments innovation is essential to sustain success. The bank recently became the first major bank to go live with a natively built API-enabled pay to service for billers in Australia.

The service enables businesses to send a payment request to customers via secure digital platforms, which customers can then review and accept.

“It’s safer, faster and cheaper, but to be successful requires the scale of a leading payments platform like ANZ.”

He says another driver of sustainable success for the organisation is the volume of payments processed via customer systems directly integrated with ANZs.

“Once integrated, these channels are difficult to replicate and these volumes grew strongly at 11 percent compared to a year ago, and 39 percent over two years.”

ANZ has one of the largest offshore operations and technology capability of any Australian company, with 10,000 staff across Indian and the Philippines providing cybersecurity transaction processing, sanctions checking, engineering, generative AI and predictive analytics.

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