Speaking at the ANZ annual general meeting in Perth on Wednesday, chief executive Shayne Elliott said simplification will help ANZ provide better services to customers, keep its operating costs low, help avoid problems in the future and help the group fix things quickly if they go wrong.
“The reality is the more businesses you are managing, the more products you are offering, the more systems and processes you rely on, the bigger the chance something can go wrong,” Mr Elliott said.
“Unfortunately, the industry has provided ample proof of that this year. When we started down the path of radical simplification three years ago, we were not doing it in anticipation of a royal commission. We did however know the world was changing.
We could see that changes in customer and community expectations, regulation, technology and competition would all have a major impact. What we didn’t predict, was how fast that change would be.
And on top of that we have softer house prices and a slowdown in housing activity. We were a step ahead [in] recognising the need for change and now we are a step ahead on making the changes to succeed in this new world.”
Mr Elliott said that the bank has changed its business more in the last three years than in any time since the merger in 1951 that created the ANZ we know today.
Since 2015, ANZ has announced the sale and exit of more than 20 businesses and reduced risk-weighted assets in its institutional business by $44 billion. It has cut the number of retail products in Australia by more than a third.
“This year alone, we have sold our joint-venture bank in Cambodia and our retail and commercial business in Papua New Guinea,” Mr Elliott said.
“We also completed the sale of our Asian retail and commercial businesses, our life insurance business in New Zealand and our aligned dealer groups here in Australia.
“For customers, we simplified our retail fee structure, removing a myriad of fees in our core retail businesses, including the charge for using other banks’ ATMs.”
While ANZ will clearly be doing much less than it has in previous years, the CEO stressed that its simplification strategy is not a case of trying to “shrink to greatness”.
“The reality is a simpler bank is just easier to run, lower cost, better for customers and less risky for shareholders,” he said.
ANZ chairman David Gonski noted that the royal commission interim report strengthened the group’s resolve to become a simpler bank.
However, he accepted that “it is not adequate to simply blame our failures on the complexities of being a large organisation, or on our systems and processes.”
“In the past, we were at times too focused on the short-term profit of the group, rather than the long-term sustainability of our relationships and our obligations to all our stakeholders.
The board has spent considerable time reflecting on this, being clear that where we have failed, we must apologise, learn from it, remediate it quickly and make sure it doesn’t happen again.
“We have also resolved that while in the past we were too focused on measuring our performance against our peers, it is now incumbent upon us to consider how our decisions impact the broader community and society more generally,” Mr Gonski said.
