Service proposition to brokers ‘really important’: ANZ

In terms of its home loan portfolio overall, ANZ stated it had “restored momentum in Australian home loans with application approval times back in line with peers.”

While announcing its results - which showed that its loan book had risen to $283.1 billion at the end of September 2022, up 7 per cent on an annualised basis - ANZ flagged that brokers wrote 58 per cent of its flow (up from 56 per cent in FY21).

It also confirmed its digital banking offering, ANZ Plus, is now in market with “deposits growing at a faster rate than any other new digital bank in Australia” (reportedly now exceeding $1.2 billion), with its fully digital home loan product expected to be out from November.

Asked at the results' media briefing if the current rising rate environment was driving ANZ’s material mortgage growth recently (and if it was returning back into the market aggressively on ‘price'), ANZ chief executive officer Shayne Elliott replied: “I’ve been doing these for a long time. I can’t remember ever sitting here and saying the home loan market is not competitive at the moment.”

“The home loan market is always competitive,” he clarified, “and the nature of the competition shifts and who’s leading the competition changes [and that] is the nature,” he explained.

“At the moment the fashion, if you will, is for cashback – [it] seems to be the flavour of the day and what’s leading.

“You have to be in the game on price, but we know, and you know, that actually while price of course is important, [it] has to be competitive, one of the big drivers is the confidence in getting a [loan] ‘yes’ and getting a ‘yes’ quickly. And that’s why building the capacity has been so important,” Mr Elliot stated.

“The other thing I would say is that, at ANZ, a little over half of our flow has traditionally been broker driven, and price is important there, but actually the sort of service proposition is really important," he continued.

“What that means is that brokers need to know... ‘that if I submit this application, I’m going to get a yes and I’m going to get it within a certain timeframe’ - and so that’s why we have invested so heavily... [in]‘building capacity.

“So yes, we are in the mix on price, [but] we’re are absolutely not the price leader (either at headline levels, or with discounts and cashbacks, [we are] absolutely not), but we are in the mix on price and we are in the mix on capacity.”

The CEO continued "And importantly just to add to that, we put in here [in the slide presentation] a lot of focus in the risk-adjusted margins, and risk-adjusted NIM for a reason.

“It’s actually what we focus on pretty heavily in making decisions around growth and appropriate investment.”

Strengthening the core business

In terms of other key aspects of the group overall, ANZ said they had released a strong financial result with all divisions making a material contribution and "demonstrating the benefits of a diversified portfolio".

“We restored momentum in Australian home loans with application approval times back in line with industry peers.

“We continued the re-platforming of Australia Retail onto ANZ Plus, which is our new digital bank, with deposits already exceeding $1.2 billion and growing at a rate faster than any new digital bank in Australia.

“We will begin piloting a digital home loan with staff in the coming weeks. This will see the introduction of a fully automated digital home loan, initially focused on the re-finance market, later in 2023. 

De-risking, acquisitions and Suncorp customers joining ANZ?

The ANZ CEO outlined that the banking group had continued its "systematic de-risking of the bank", highlighting the sale of its margin lending business to Bendigo & Adelaide bank and the formal separation of its wealth business to Insignia and Zurich.

ANZ also exited the broker channel for stand alone asset finance deals last financial year - and set out to acquire Suncorp Bank.

Mr Elliot said: “Combined with the exit of financial planning & advice, as well as the associated remediation being at the very final stage, we are the only major bank in Australia to have removed the risks associated with wealth management for shareholders.

“Given the progress we have made in strengthening our core business, we were able to agree the acquisition of Suncorp Bank, which will provide an important platform for growth, particularly in the fast-growing and rapidly diversifying Queensland economy."

He continued: “Suncorp Bank is a well-run business that will see more than one million new retail customers join ANZ, sharing in the benefits of a wider range of products and services. It also means the Suncorp Group is able to focus on its core mission of being the best insurance company in Australia and New Zealand.

The acquisition, which is subject to government and regulatory approvals, will be partially funded by the successful $3.5 billion equity capital raising.

“This was the world’s largest equity raise this calendar year for an M&A transaction and was structured in a way to ensure all shareholders were treated equally,” Mr Elliott explained.

Direct customer access to home loans and services

Looking forward, the bank is now focused on its digital banking strategy, with the aim of becoming a ‘new type of retail bank’.

Since launch, its ANZ Plus savings and transaction product has had more than 60,000 customers join to use the “simple, safe and secure process”, while ANZ Plus also recently become the fastest new digital bank in Australia to reach $1 billion in deposits, ANZ stated.

The next stage in its evolution will be its home lending proposition, designed to “help customers buy and own a home faster,” ANZ customer experience lead Peter Dalton explained.

“Customers will be able to apply for and manage their loan via their mobile phone, with approval in minutes and support from an ‘ANZ Plus Coach’ whenever they need it,” Mr Dalton stated.

“Buying a home is the biggest financial transaction most people make in their lifetime and our automated, transparent and secure digital experience will make it seamless.

“We want to cut the time to a decision for potential homeowners from days to minutes while ensuring customers requiring help can access it."

Mr Dalton said that a beta test will roll out with staff before the end of the year with the initial home lending offering "launching to market later in 2023,” he said.

As part of the new retail banking platform, ANZ has built more than 200 new, re-usable business services such as customer identification and customer access management, the bank outlined.

“We are re-using three quarters of these for home lending,” Mr Dalton added.

“We also followed a set of principles designed to help our customers buy a home and own it sooner.

“These included using data before documents and building a living statement of financial position for our customers.

“Having this dynamic position with data from both ANZ and other financial institutions will make it easier and quicker for us to make home loan decisions for our customers,” Mr Dalton concluded.

[Related: ANZ to pay $25m for ‘misleading customers’ over 20 years]