WOOL: ANZ CEO Shayne Elliott envisions transforming the bank digitally. Where do you currently see ANZ on this digital transformation journey when you pitch yourself against your peers in this industry?
Gerard: Often when we say how far we are in the digital journey, it’s like saying ‘we’re here’ and the aim is to get to the moon. But that implies there is a clear endpoint when the reality is we have a new way of working. We have made significant progress over the past three or four years, such as our work around mobile banking, institutional banking and so forth. We compare very well with our peers in the industry in areas such as payments, and our approach on digital wallets etc. We’ve been acknowledged as one of the most developed among our peers as part of the industrywide effort to deliver Australia’s new payments platform. And we’ve partnered with industry players to find innovative use for adaptations of blockchain technology. We’re making progress but the challenge is meeting customer expectations; they want more, and faster. So the rate of change needs to increase.
To do this, we’re making significant changes in how we run our Technology function. Firstly, we’re moving from a ‘projects’ mindset to a service mindset, which will see us managing the lifecycle of the environment. With ‘IT as a service’ we’ll provide a catalogue of services we’re accountable for and improve continuously, based on customer feedback.
Secondly, our teams will be organized differently in this service model. People will work with a service for longer than they would have historically through project cycles. We’ll need people with different skills sets, all working in a more agile way. We’re moving the technology organization towards more of a DevOps approach where the operational team and the software developers are working together.
Thirdly, we are working on making our technology structure simple and flexible which is needed to ensure that, in the future, we deliver change at the velocity our customers expect.
WOOL: In which area would you use public Cloud?
Gerard: We’ll use public Cloud where we have no personal identifiable information: our website anz.com sits in the public Cloud today.
We use de-identified data for analytical work and testing and we use public Cloud for particular services made available by a Cloud provider (capabilities that we don’t have in-house).
Thus areas around analytics where the data is anonymized and outward facing services such as our websites are the prime areas - but I’m also not talking about options outside of Infrastructure-as-a-Service and Platform-as-a-Service.
WOOL: What do you see as the future trends in the banking industry?
Gerard: I think that systems of engagement will continue to evolve, become more sophisticated and more connected.
That means that we are talking about mobile and voice assistants, and the different ways in which we can provide a richer experience to the customer.
The other part of that will be the increasing role of different touch points for the customer; there is the Internet of Things and how to link all the connected devices in daily life. Behind the scenes, there is a role for blockchain as a fundamental building block for B2C as well as B2B commerce.
I was counselled by our CEO Shayne Elliot and he said: “We can talk about a lot of stuff… but at the end of the day, what we’re really trying to do is help a customer to save money, make a payment or borrow money … and all future trends will need to support that.”
WOOL: And finally, in the next 3 - 5 years, how are you going to prepare your teams to work differently in terms of the skills, size, and organization?
Gerard: There defi nitely is a shift in the form and the function of the organization and there are a couple of things to keep in mind here.
Software will play an increasing role in what we do and people will need to have a solid understanding of the same.
The second thing is that as we move to an ‘as a service’ model, there are a number of skills that aren’t necessarily technical but are needed. To be a good product manager, you must be technically competent in your domain. You clearly need to understand security and have a range of other skills that are required to engage with the customer; the ability to build something that makes sense commercially even if you’re not recovering the cost directly and the ability to obtain and analyze feedback (from a range of sources) to continue to improve it. Therefore you need people with both commercial and software skills.
When I look at where ANZ and other banks are heading, I use the example of security. There is a very good chance that our security capability will not only be fundamental to what we do internally to retain our banking license and our customers, but part of our security capability could be baked into offerings that we provide to our customers.
WOOL: Over the next one or two years, what are the things that you are aiming to count as milestone events?
Gerard: Payments will continue to evolve and what we do with the platform to enable payments. The data those transactions generate will lead to the provision of richer services to individuals as well as businesses. Data is the crown jewel as long as you are using it to turn that into a valuable service and an advantage for customers. We see a huge opportunity within the data spectrum: both, the way we generate and provide insights to our customers and also in the way we use that data - along with the other industry data that is available - to make decisions such as your credit positions, provide better protections against cyber threats and more.
Outside these areas, mobility will continue to be a major focus area. The omni-channel experience should give the sense of predictability, consistency, and quality across all channels.
WOOL: What do you think about open banking?
Gerard: This direction of working as an ecosystem is a good thing for the customer, and the market, as long as it is sufficiently thought through. While we may be happy to accept imperfection in the name of openness and progress, we need to continue to protect customers and the service provider.
The open data regime has been evolving in Europe and is now coming to Australia and people will be able to access their data and do whatever they please. However, there is a question as to whether people understand the complexities of the environment in which they will be operating, as well as the level of maturity and trustworthiness of those to whom they will be providing their data.
Trust must be a fundamental part in the value proposition. We build security systems to protect our customers' money - the information and everything else that is associated with that.
In the open data regime, there is talk around the concept of ‘the right to be forgotten’. That makes perfectly good sense in a social context but not in banks, where we have legal requirements to maintain data for up to seven years to inspect the credit risk, taxation information and everything else.
WOOL: Do you think blockchain will actually redefine customer journeys, then on?
Gerard: Blockchain will be fundamentally important to not just banking but to commerce in general. Much in the same way as the internet was. To some degree, it will change the trust equation over time.
WOOL: You have worked in the Cloud computing business and also understand that Cloud brings along digital security concerns in the world, and data is increasingly vulnerable. How do you think we can find the optimal balance between public Cloud, private Cloud and dedicated in-house infrastructure?
Gerard: Technology continues to change and evolve at an increasing rate; there’s a requirement on businesses to change at a similar rate. The challenge is how to do this sustainably - that is, cost effectively and safely.
It’s about the risk appetite. We’re at the point where everybody understands there’s a role for public Cloud and also Cloud-like capabilities behind our firewall. So we’re working with both. private Cloud makes sense in a number of cases, and of course, there’s no substitute for public Cloud and the way it offers access to a vast range of IP that organisations, don’t have and would not choose to build in-house.
Cloud providers – whether it’s a data analytic engine or a video codec - are providing embedded IP that represents much more than just the traditional infrastructure. When we can make use of that to the advantage of our customers and our organisation then it makes perfectly good sense to do so.
At ANZ, we’re focused on moving fast, safely. We make massive investments in security and we have a very strong internal capability. In addition, we have requirements laid out by the regulator.
WOOL: That makes a lot of sense! Now throw in that mix, Artificial Intelligence. That’s a potent experience changer.
Gerard: Absolutely. Even limiting it to traditional Robotic Process Automation, we can see how that’s profoundly changed the customer experience, both in terms of speed and availability of service.
Smart algorithms will fundamentally change the way we analyze our world and what we offer to it.
However we need to make sure that we understand our customers and what they want/need as it will be the primary driver around where and how we will use automation, machine learning and artificial intelligence.
WOOL: That's interesting! In India, we see the mobile wallet company or a telecom company start off with the wallet service and then eventually, the wallet company applies to be a bank by itself and they are going to, maybe start off as a payments bank. Do you see those trends - the shift where the wallet companies become full-ﬂ edged banks?
Gerard: Absolutely. A whole range of things that people do today is fundamentally different. I am buying movie tickets - is it a payment or a saving or a loan? The different lenses with which people are coming for these basic transactions is the disruption which is happening in our industry. The customer is deciding that he is going to work with one small company for his credit card, with a different company for deposits and he will do that for his convenience. But the other important point is around trust. In Australia, by and large, people trust banks. People would prefer to see that trust expanding to include some new innovative services rather than having to take a leap of faith with an unknown entity.