Changing of the guard: ANZ Bank

Summary:Get an insider's look at the recent history and potential imminent future of Australia and New Zealand Banking Group's technology operation in the third of our Changing of the guards series examining generational change in the nation's big four banks.

When it comes to its technology operations, Australia and New Zealand Banking Group's philosophy appears to match its corporate slogan: "Being different". The bank has no plans to rush after its rivals and rip 'n' replace its core banking systems. Instead, it's advocating a course of simplification and spending its technology dollars on new projects that bring in more profits.

Kieran Griffiths

ANZ deputy CIO Kieran Griffiths (Credit: ANZ Bank)

"Overall, our approach is to direct most of our investments into the channels where we feel the greatest customer and revenue benefits are," Kieran Griffiths, ANZ's deputy chief information and general manager of technology service and infrastructure management says. Griffiths has interim joint charge of the bank's technology following the shift in role of CIO Peter Dalton in December 2008.

"Like most other banks, we constantly monitor our ratio of run-the-bank to grow-the-bank spend and have made good progress in this during the past few years investing a greater proportion of our spend in the latter," Griffiths says.

The direction of those projects is a no-brainer, according to Griffiths — the internet and mobile phones. In Asia, these have specific importance because many customers have never had a traditional bank account. But even in Australia, technically-savvy banking is the word of the day, the executive believes.

He points out that ANZ was one of the first banks to offer mobile banking in Australia. Now over 120,000 customers log on each month. In contrast, mobile banking attracts 60,000 users per month for Commonwealth Bank of Australia, according to that bank when it spoke on its new face-lifted NetBank in May.

"The aim is to improve these offerings, and deploy the services across the Asia-Pacific region too," Griffiths says.

The bank's focus isn't about everyday banking via a different medium, according to Griffiths. Instead it's about coming up with new services made possible by the technology, such as SmartyPig, an initiative that allows family and friends to contribute to a person's savings via Facebook and MySpace. SmartyPig won a Canstar Cannex Innovation Excellence Award.

CIO wanted

It was to follow this new direction that Dalton left his role, and in December became the general manager for innovation at the bank, adding a reporting line to Margaret Payn, group managing director of strategy and marketing, but continuing to also work under David Cartwright, group managing director of operations, technology and shared services.

Dalton's move was an unusual one that had Australia's banking IT industry collectively scratching its head. Was the CIO demoted, or was he bored of keeping the lights on in ANZ's technology operation? If you listen to the bank's chief executive Mike Smith on the topic, it seems unlikely to have been a demotion.

dalton-anz.jpg

Former ANZ CIO Peter Dalton
(Credit: ANZ Bank)

"ANZ recognises that to become a super regional bank of global quality, we must make strategic investments to developing 'best of breed' technology, systems and products ... we need to continue to lift our game — to bring real focus to innovation and the role it will play in our future growth," Smith wrote in an article for an FST Media magazine earlier this year.

"That is why we have established a dedicated innovation team at ANZ led by a senior executive [Peter Dalton] with a clear mandate." Dalton has been at ANZ for over a decade. When the former CIO Mark Willis left in July 2006, Dalton became shared acting CIO and was officially appointed to the role in September 2006.

Given how enthusiastic the CIO was about the more unusual parts of IT, such as greening the bank's operations or giving his workers vendor sabbaticals, it seems likely the former CIO will rise to his new innovation challenge with relish.

And he'll likely have the support of those he reports to. Appointed early 2007, Smith's first annual general meeting placed great significance on technology, as he named it as one of the four core capabilities to bring the bank growth. He put forward a vision of technology which wasn't a constraint, but instead a "core source of advantage".

In the same FST Media article from earlier this year, the CEO placed further emphasis on the importance of Dalton's new position. "Experience shows bureaucratic and hierarchical workplace cultures are the enemy of innovation, whereas innovation is supported when new ideas are valued and failure is accepted as part of the learning process," he said. "And in reality, new ideas are often fragile in large organisations because they challenge old ideas — and revenue streams."

Yet without someone to guide the bank's everyday needs for IT as well as innovation, the bank's technology vision is unlikely to go far. It has not yet found a replacement to carry out Dalton's old role, despite having conducted a global search for months. "This is an important senior role within the bank and it is important that the next CIO is the best fit for our super regional strategy," a spokesperson for the bank says. Until it does, Cartwright and Griffiths are jointly responsible for the job.

Perhaps, with Dalton taking the interesting bits away, it isn't so palatable.

Becoming super regional

The bank's super regional strategy, announced at the same annual general meeting in 2007, is at the centre of everything the bank does, not just the hiring of a new CIO. To ANZ, super regional means becoming the "global" bank for the Asia Pacific pond, making mergers and acquisitions in Asia to derive 20 per cent of its earning from that region.

The strategy was key recently in the appointment of Singtel and its subsidiary Optus as the bank's managed network services provider in a $500 million, five-year contract. The bank's Singaporean choice — just weeks after rival Commonwealth Bank of Australia chose Australian stalwart Telstra — seemed to make its regional focus clear.

Together, Singtel and its subsidiary Oputs will provide network services to the bank in Australia and 30 other countries in the Asia-Pacific region, including the company's operations centre in Bangalore, India. "This consolidated approach to telecommunications will support our growth strategy across the Asia Pacific region," Griffiths says.

The bank's transferring of technology jobs to India also plays the tune of a regional bank. In another FST Media interview in May last year, Dalton said that around one third of the bank's technology staff resided in Australia, just under one third in New Zealand and the other third in Bangalore. The Bangalore staff manage software development and technology support for many ANZ systems, and in some cases ANZ's operational functions, according to Griffiths.

Next: Core banking and the future.

Topics: CXO, Mobility, Optus, SingTel, Telcos, Telstra

About

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for t... Full Bio

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