ANZ Bank: Mobile is the catalyst for banking transformation

In the "age of the customer", banks and financial institutions will have to re-examine mobile technology if consumer needs are to be met, according to ANZ Bank's managing director of retail distribution Mark Hand.

Speaking at the Technology & Innovation — the Future of Banking & Financial Services conference in Sydney, Hand said that ANZ, like many financial institutions, is working to overcome inflexible legacy systems and high levels of regulation to deal with the new reality of banking: digitisation.

"The centre of gravity has absolutely shifted to digital," he said. "A recent Google study found that two in five customers move to a competitor's site if it fails to provide a mobile-optimised experience.

"Our customers have told us that they expect the usage of digital channels in the future will grow significantly, with tablet and mobile being the beneficiaries."

By way of example, Hand said that the number of customer transactions within branches has declined remarkably in recent years; the bank now has around 10 million fewer transactions in branches than it did just three years ago.

"Customers prefer to use internet banking, automated payments and mobile apps," he explained. "So the opportunity [for banks] will lie in how banks continue to leverage mobile, GPS technologies, and, importantly, integrating that with what we already know about the customer, or what we can learn about the customer."

Commenting on the bank's response to digitisation — in particular, smartphones — Hand said ANZ is gaining traction with mobile technologies such as QR codes to allow customers to purchase items in-store using only a smartphone.

"ANZ also has a mobile wallet pilot under way, which we are seeing great traction and acceptance with. We have also partnered with Ingogo to develop an end-to-end payments systems and mobile phone app to allow consumers to book and pay for a taxi in one step.

"We are also using location-based services to allow customers to find their nearest ATM or ANZ branch from their phone, and this has opportunities to extend to loyalty programs with retailers in the future."

The bank is also working to use location-based services to identify when customers are in rival bank branches and then send them SMS product and banking offers — such as a higher term deposit rate — in the hopes of retaining the customer.

In addition, ANZ is making use of smartphone cameras to allow consumers to take a photo of a paper bill and have the data contained in it automatically entered into the customers' internet banking payments facility. This uses similar technology to those used by US banks, which currently photograph cheques to enable funds to be instantly deposited.

While consumers are benefiting from higher levels of digitisation in the banking sector, financial services organisations themselves face increased competition, particularly from "disruptor" companies moving into the sector, Hand said.

"The downside to this increasingly mobile world is the ease with which digital disruptors can enter the retail market ... and we can't always react and act quickly to any disruptors who enter."

By way of example, Hand cited the entrance of PayPal and Square, which are disrupting payments by offering a flat monthly fee for businesses to process unlimited credit card transactions.

"In mid-2012, peer-to-peer (P2P) lending passed the $1 billion market, according to Forrester, and the next disruption in the P2P space is anticipated to be crowdfunding," he said.

"Smart firms will figure out how to leverage P2P firms such as Kickstarter as an alternative source for small business startups to fund themselves. The bank that nails that will generate great loyalty and benefit in the credit increase needs for those customers in the future."