Tech continuing to displace branches for ANZ

ANZ Bank has flagged further consolidation of its branch network amid ongoing digitisation.

Announcing its first half results for 2023, the bank said in its investor presentation [pdf] that “continued investment in digital channels” and a “reduced physical presence” were major contributors to $274 million in opex savings due to “productivity and regulatory investment reprioritisation”.

Speaking on a media call, CEO Shayne Elliott said the bank currently has “about 400 branches in Australia”, but that customers are “voting with their feet”.

“Nobody wants to go to the branch any more”, he said.

In the future, he said, ANZ “will not need the same branch footprint. I don’t know what the right number is, but I absolutely know it won’t be 400.”

As well as the impact of its digital investment, ANZ’s opex savings also included updated network and software contracts, and a simplified infrastructure, the bank said.

Its investment in digitisation grew $131 million, including cloud and ANZ Plus's operating costs.

Total opex grew from $4.8 billion to over $4.9 billion year-on-year.

The bank turned in a statutory profit of $3.5 billion, flat on a year-on-year basis, with its cash profit up 12 percent to $3.8 billion.

Elliott highlighted the success of ANZ Plus, which today has more than 260,000 customers, and in March, 39 percent of the platform's customers were new to the bank. 

He added that ANZ Plus customers are also “doing more things” with the platform, deepening their relationship with the bank.

Elliott said the growth of ANZ Plus will in the long term mean the retirement of ANZ Classic, which runs on legacy technology.

Another key impact technology transformation has had was on the success of its institutional banking operations, Elliott said.

Over the years, “hundreds of millions” have also been invested into the technology that supports its institutional operations, which Elliott said is no longer solely driven by institutional lending.

Non-lending products – international transaction processing, for example – now represent 53 percent of the division’s income. 

That included 31 percent year-on-year growth in ANZ’s New Payments Platform processing, which also represented a tech investment in the “hundreds of millions”, letting the bank participate in the NPP in its own right as well as offering white-label services to midrange banks.

The institutional business had just over $3 billion revenue for the half year, up 35 percent on the same period in 2022.