Sanjoy Sen, Australia and New Zealand Bank’s (ANZ) managing director of retail banking Asia Pacific discusses with Sruti Rao the bank’s core strategy of enhancing its digital channels to address the core needs of the APAC customers
Over five years ago, at the start of the 2008 financial year, Australia’s fourth-largest bank by assets, ANZ, embarked on a strategic transformation which recognised that there was a unique opportunity to create value for shareholders by becoming a super regional bank: a bank of global quality with regional focus.
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The move recognised that a once-in-a-century shift was underway in the global economy as growth opportunities moved from the developed economies of the West to Asian economies and China in particular.
The transformative initiative was adopted at the wake of the 2008 crisis with the aim of indicating to customers, its global standard but regional focus. This has proven to be a successful strategy, building the bank’s credibility in the industry.
Profits over the five year period have also enjoyed a consistent increase, growing at an average of 14% year-on-year growth from 2008 to 2013.
Over the five year plan in imposing its Super Regional strategy, ANZ made significant investments to expand its presence in core Asian markets, notably in China, Indonesia, Philippinnes, Vietnam and re-commencing operations in India.
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By GlobalDataAcross these markets, the bank has increased its branch networks across the various markets over the five year period, through physical outlets as well as local incorporations and joint ventures.
The importance of retail
In establishing ANZ’s focus in the Asia Pacific region, ANZ’s managing director, retail banking Sanjoy Sen stresses that the retail banking business unit holds great importance in implementing the bank’s regional strategy.
Sen tells RBI: "Within ANZ’s super regional strategy, retail is a very critical component because it brings a sticky deposit base, it adds to our liquidity and to our brand, and it brings connectivity to the customers."
Total customer deposits for the bank experienced a healthy 12% per cent year-on-year growth A$ 368.8bn in 2013. A significant portion of this liquidity overall comes from Australia, which constitutes 56% of the bank’s deposit base. New Zealand deposits make up 17% per cent with the remaining 27% coming from the rest of Asia Pacific, Europe and America (APEA).
Sen elaborates that the retail channel drives the connectivity between the bank and its customers from across markets. Providing services, for instance, for a customer needing to transact across accounts from Singapore to Australia, is feasible through the distribution network of branches and ATMs built across the markets for optimal service to the customer. It is this core capability of seamless and borderless transactions across the geographies that holds great priority for the bank, in building its brand and customer satisfaction across the region.
What is the retail strategy?
As Sen describes, ANZ’s core retail banking strategy centres on servicing the right markets, focusing on the relevant customer segments and most prominently in delivering a seamless digital experience to today’s customer.
Naturally, Australia and New Zealand are key markets for the bank, collectively contributing 84% of its profit in 2013, however Sen says there are other key economies in Asia in which the bank takes a strong interest.
Adds Sen: "We focus on the right geographies like Singapore, Hong Kong, China, India and Taiwan. These are strong markets in terms of growth and markets where consumer needs are growing at a rapid pace, and we can serve these clients through our retail distribution".
In terms of prioritising the right customer segment, Sen says that the bank looks to serve the affluent and emerging affluent segment of customers as the complexity of its needs brings significant opportunity for the bank.
"At the end of the day, it is very difficult to serve every customer in every market. We believe that in this space of emerging affluent and affluent, there is a customer life stage that we can offer. For example, a customer comes in they would like a credit card, as they graduate they prefer unsecured loans, as they get more affluent the bring in deposits to the bank, buy a property at some point and we can offer them mortgage loan. We would like to bring them a value proposition that is seamless, across the emerging and affluent segment."
Investment in digitization key to omni-channel capability
In expanding on the focus of a digital strategy, Sen highlights the backbone of this strategy centres around the technology-oriented preferences of today’s emerging affluent customer.
"Data shows that there are 600m online users in Asia. This number will soar to 2.5bn by 2020. 40% of users use online modes, and this moves up to more than 50% when looking at customers below 40. So we are looking at customers that are very digitally savvy, they have more choices, and are less loyal towards banks. On one hand they want personalised solutions but also want it to be a simple process."
The awareness of the mobile and social media savvy customers plays a significant role in the channel digitisation priority of the bank. As the 20-year banking veteran observes, the frequent use of mobile devices from social media sites in the daily lifestyle of the consumer should be mirrored in their banking experience as well, in order for the bank to engage with the customer of this generation most effectively.
Says Sen: "Today we spend more time of on our mobile tablets, Facebook, Whatsapp and the like. The same thing if you think ahead – if you could have that sort of convenience on banking needs through your applications, that’s what the digital revolution is all about.
"The future is on how you can integrate that digital revolution, within the banking network. It’s about being able to provide an omni-channel or cross-channel experience to the customer. If you wanted some advisory requirement you would come to the branch, but if it is some basic transaction you will be able to do within a self-serving kiosk, whether that is withdrawing or saving in money. If you want a price comparison, then you would use a tablet application. You are able to navigate depending on your requirement, through different channels. "
In highlighting the developing channel strategy, Sen says that while there is more of a shift towards the online and mobile platforms, the role of the branch and face-to-face interaction changes, across the industry.
ANZ aims to build a process such that automated and simple transactions and account management to be done through digital streams, while the branch will take on more of an advisory service role.
Appreciating non-traditional competition
Sen is also keen to flag up the bank’s use of external social media networks such as LinkedIn and Google. He says that they are consistent with the bank’s awareness of the interconnectivity of systems and that the future of banking can no longer follow traditional business models.
"It’s important for us to understand the game that we are in, and what the strategic intent is, and slowly drive our banking needs towards that because that is how our customers’ needs are changing.
"As an ANZ leader, I need to think that my competition is not necessarily another bank. My competition could be a Google Wallet or payment provider who has disruptive technology which can change the landscape."
Sen realises that banks should be embracing these new players in order to bring better connectivity for the bank as well as the customer.
"As the market evolves we will have to go into an open ecosystem. It’s very difficult for one individual player to have a proprietary network to satisfy all customers. It will be a partnership with telecomm providers, Visa, MasterCard, Google wallet and the payment providers, all will come together.
I should have the ability to have an ANZ app on your mobile and not necessarily require you to come to my website to access it, because that makes it tough. There will be an open ecosystem of multiple players from multiple industries come together.
The key challenge of implementing the ambitious digital strategy lies in the in the process capabilities of the bank, admits Sanjoy. The concept of synthesising the technology process across the bank from front-to-back has not been implemented as much and is still absorbed slowly by banks.
"Today there is a very silo approach in banks, with the different product teams working independently to one another. How to transform this to make it a technology enabled company is the key challenge for the industry. A business transformation in this has to occur."
Futuristic banking: Addressing the digital needs of Asia
In highlighting his future needs of the Asian clientele, it is more than apparent that the ANZ fully embraces the adoption of technology to enhance the banking experience for their customers. This holds testament to the future of banking that will only build on digital capabilities, with the mobile or tablet being the new ‘personal touch’ of banking. Sen highlights the hi-tech future of banking, and the assurance that Asia Pacific will be riding that wave in full swing.
