ANZ banking on savings from ANZ Plus as competition kills returns

The lender is pitching its new ANZ Plus platform as cheaper, faster and more compliant with regulation, as it prepares to transition customers to the new system.

ANZ chief executive Shayne Elliott and group executive, Australian retail Maile Carnegie. Picture: Martin Ollman

ANZ is banking on its two big tech transformations – at a cost of $2.5bn and counting – to shape the future of the Melbourne lender, with plans to head off red-hot competition in retail banking.

Speaking in the wake of its $6.7bn full-year cash profit last week, ANZ Australian retail group executive Maile Carnegie said the bank had to acknowledge its profit problems, as the rise of brokers and branchless banking threatened earnings that buoyed the industry in past decades.

Ms Carnegie said retail banking had become “significantly less profitable”, warning banking was being squeezed between growing expectations from customers and regulators and price pressures from rival banks in both mortgages and savings.

Customer deposits rose 14 per cent last year, while home loans soared 16 per cent.

Despite this, returns from ANZ’s retail bank contracted 17 per cent in 2024, down from $1.93bn to $1.6bn over the 12 months to September.

Ms Carnegie, a former Google exec who before once ran Proctor and Gamble’s Australian and New Zealand operations, said the higher expectations were being reflected in the “economics of the (retail banking) business” which she warned had “fundamentally ­declined”. “We need something which is not just better, faster and cheaper, but we need something that’s better, faster, cheaper, and more compliant,” she said.

Ms Carnegie, who joined ANZ in 2016 to spearhead its digital banking business before being handed the reins to an expanded role in digital & Australian transformation, said the entire banking sector was transforming its core technology.

Already rival lenders have announced plans to change their technology, with Westpac’s $3bn Project Unite aimed at tying together the bank’s various systems and brands, while Bank of Queensland is attempting to wrangle three different systems under one Temenos platform.

Many banks are shifting from legacy COBOL-coded systems, while other neo-banking platforms such as Bendigo Bank’s Up have proved popular with ­millennials.

ANZ Plus launched in early 2022, one of two key technology projects for ANZ, the other being its Transactive Global system, used in its institutional arm.

ANZ has spent more than $2.5bn on its key technology projects ANZ Plus and Transactive Global. Picture: Lisa Maree Williams/Getty Images

Ms Carnegie said 80 per cent of the spend, to date, on ANZ Plus had been ploughed into creating “underlying foundations” for the new banking platform.

The further 20 per cent has gone to building “customer features that go on top of it”.

But, Ms Carnegie said ANZ was now planning to shift its spending to focus on new customer features, amid plans to shift the entire bank and the recently acquired Suncorp Bank’s 1.2 million customers to ANZ Plus.

By 2027 no new customers will be joining ANZ’s legacy banking platform, with Suncorp’s customers to be rolled into ANZ Plus en masse in the coming years.

Ms Carnegie said ANZ was planning to stress-test the transition with selected groups of ANZ customers to prove its system worked.

NAB’s attempts to migrate customers from its UBank system to its recently purchased 86 400 platform were marred by problems.

NAB snapped up 86 400 in 2021 in a $221m deal, but there were problems in the transition of almost 600,000 customer accounts, resulting in problems accessing accounts.

Ms Carnegie said a key point of the migration would be to preserve billers and automated transactions.

ANZ has spruiked the cost savings of ANZ Plus over its legacy platforms, telling investors last week it was 45 per cent cheaper to acquire customers and 35 per cent cheaper to serve them.

Ms Carnegie said a key cost saving in ANZ Plus was the lack of people-handling required to serve the bank’s customers, compared to the bank’s legacy platforms.

She said ANZ would need fewer staff when it fully rolled over its customers to ANZ Plus.

“We will need different people and, yes, fewer people,” Ms Carnegie said.

“We will have people doing higher paid work.”

But Ms Carnegie said ANZ would look to use some of the staff previously needed to handle customer information to instead provide banking services.

This could see them spending more time on combating scams, or trying to win business from homebuyers.

ANZ has said it wants to bring more home buyers in-house.

Originally published as ANZ banking on savings from ANZ Plus as competition kills returns