Reinforcing Our Commitment to Institutional Banking in Asia

Following an in-depth strategic review, ANZ recently made the decision to sell its retail and wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia to DBS Bank Limited (DBS). This is now subject to regulatory approval and is likely to be completed in 2017 or early 2018. In this special Executive Interview, Mark Evans, who moved from his role as ANZ’s Chief Compliance Officer to Managing Director of Transaction Banking in June 2016, talks to Helen Sanders, Editor, about the implications of this announcement for ANZ’s corporate and institutional clients. 

Could you give us some background behind the recent announcement? 

Last year, we did a strategic review of our retail and wealth businesses in Asia to explore how we could optimise our customers’ experience of the bank. As a result of this review, we concluded that to continue giving our retail and wealth customers the excellent experience of working with ANZ that they have come to expect, we would need to invest significantly in our branch network and digital capability which could dilute our focus on our corporate and institutional banking business in Asia. Consequently, we made the very difficult decision to sell the retail and wealth business to DBS, a decision we announced on 31 October 2016. We believe that retail and wealth customers will benefit significantly from being part of DBS, a progressive and dynamic retail and wealth bank that has provided banking in the region since 1968 with great expansion plans.

What does this mean for corporate and institutional customers, and how would you describe your Asian strategy for these customers?

By streamlining our Asia business, we are now better able to focus our investment, energy and commitment on building on our core strengths, namely maintaining our position as a leading corporate and institutional bank in Asia, as well as a market leader in Australia and New Zealand. This is a long-standing strategy with commitment at the highest level in the organisation. Our CEO, Shayne Elliott, himself has an institutional background and ran this part of the business between 2009 and 2012, building on similar roles he held in other banks.

How does ANZ differentiate its value proposition in Asia compared with other banks?

Working with ANZ in Asia brings our Institutional and Corporate customers a wide range of benefits. While many banks have a representative presence in Pudong, for example, we have an on-the-ground presence in our customers’ key expansion markets, not only China, Singapore and Hong Kong, but also the increasingly significant Mekong countries (Myanmar, Laos, Thailand, Cambodia, Vietnam). Our business is firmly founded as a regional bank that supports customers’ trade and capital flows between these countries and our home markets of Australia and New Zealand. As clients expand their manufacturing base and supply chains in these countries, we leverage our local presence and expertise to help them to assess potential partners and meet complex regulatory requirements. In addition, clients are attracted to ANZ’s credit quality, and therefore the security of cash balances and deposits that they hold with us, and our long-term commitment to investing in the countries that comprise our geographic footprint. This commitment and ability to support clients proactively as their international growth journey progresses is highly significant for treasurers planning their banking strategy.

While most of our clients have their roots in, or significant activities in Australia and New Zealand, corporations in key industries in which ANZ has specific strength and expertise, such as agriculture and resources, are also attracted to ANZ’s services, particularly if they can then extend this relationship into Australia and New Zealand. Likewise, our footprint supports our global financial institution clients, meeting their on the ground needs in many markets where they are not represented.

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In addition to your geographic and industry sector strengths, what are the other key reasons why customers choose to do business with ANZ in Asia?

Our aim is to make it as straightforward as possible to do business with us, and to exchange information and transactions seamlessly, whether clients access our services through web-based or host-to-host channels. As a result, we are consolidating our online platforms to create a cohesive experience across geographies and business activities, not only transaction banking, but also areas such as markets, lending and research. Not only does a single platform provide clients with a global, integrated view of their business, but it also helps to meet regulatory requirements. For example, clients with business in countries such as China, Indonesia and New Zealand need to hold certain information onshore. By leveraging our platforms, we enable customers to meet these obligations seamlessly both at a point in time and as regulatory requirements evolve over time.

Continuing the theme of technology, what role do you think technology innovation plays in corporate treasurers’ choice of banking partnerships?

Seamless connectivity, timely, transparent access to information in a useable format, and regulatory compliance are clearly key requirements amongst our clients. Beyond this, clients welcome innovations that help increase efficiency, automation and control over financial processes, so long as the bank can first demonstrate its ability to provide the depth of support, and long-term commitment that treasurers require in the relevant markets. Within this context, investment in innovation has always been an important element of ANZ’s customer strategy in order to achieve the aim I discussed previously: namely to make it as straightforward as possible for our clients to bank with us. For example, we were the first bank to introduce host-to-host connectivity to corporate clients, not only in Australia and New Zealand but across our footprint. In addition to connectivity initiatives, for example, we recently completed a blockchain (distributed ledger technology-based) proof of concept in partnership with Wells Fargo to streamline, simplify and accelerate reconciliation of cross-border correspondent banking transactions. Although taking place ‘behind the scenes’, this will provide clients with faster turnaround on incoming payments, lower costs and more timely, accurate reconciliation and account posting.

How do you see your corporate and institutional banking strategy in Asia developing in the future?

As we refine our regional presence, partners and customer segments, we will be focusing our investment on the solutions and services that specifically meet the needs of the industries in which we excel, namely resources, agriculture, financial institutions, and in Australia, property. Most companies in the resources and agriculture industries do not operate along single corridors (such as between Australia and China or Australia and Indonesia) but across multiple markets, including India, Taiwan and Vietnam, for example. Consequently, with a network comprising 34 countries, we are focused on helping to support these companies’ trade flows, optimising working capital and reducing buy-side risk across all jurisdictions, in addition to key trade corridors.

We also continue to invest in technology, most notably preventing financial crime and supporting compliance with critical regulatory requirements such as bribery and corruption laws, tax avoidance requirements and country-specific regulations such as the Modern Slavery Act in the UK, including tools to detect and alert potentially non-compliant activities. As a bank, we cannot expect to anticipate customer needs and innovate in isolation, however. We are proactive in partnering with customers to understand their changing strategies and business models, and devise innovative solutions to meet evolving challenges. There is far more focus on bank – corporate collaboration than in the past, a development that we welcome, and we are excited about the growing opportunities to develop and deepen our customer dialogue.

Another way in which I think banks’ focus is changing, or at least becoming more important since the global financial crisis, is their social and community role, and I intend and hope that ANZ will continue to take a lead in this area. I want to make sure that we make decisions based on what’s right – and can demonstrate this to regulators and the wider stakeholder community - not simply what’s right for the bank. Of course, we need to generate profits for our shareholders, but not to the detriment of the communities in which we operate. Instead, by building trust and transparency, freeing societies from financial crime and facilitating growth, we can be a powerful, positive contributor to social improvement and global economic growth.