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ANZ (ASX:ANZ) share price dips as bank focuses on AI automation

Digitised image of human hand reaching out to touch robotic hand signifying ASX artificial intelligence share price
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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price had dipped slightly after the bank announced its focusing on automating home loan application reviewals and other key processes through artificial intelligence (AI).

The ANZ share price is trading at $28.81, down 0.21% at the time of writing.

ANZ is Australia’s second-largest bank by assets and third-largest by market capitalisation. 

ANZ focused on machine learning outcomes

Investors are often excited by the prospect of the digital revolution enhancing productivity. ANZ’s gains today may reflect the company’s insistence on harnessing the potential of artificial intelligence. 

ANZ is hoping that it can reduce the process of reviewing a home loan application to just four seconds, as a computer scans the application forms, ticks the appropriate boxes, and makes a decision.

The technology now exists for ANZ’s computer programs to make these decisions faster than real-time and improve as they work.

ANZ believes this will improve customer experience, as people will no longer have to enter banks and wait for teams to review their paperwork. It will also lead to potential productivity and revenue increases, through less menial labour. 

ANZ received more than $1.2 billion worth of mortgage applications every day in 2020, with turnaround times averaging 17 days.

What ANZ is saying

ANZ’s chief risk officer (CRO), Jason Humphrey, revealed in ANZ’s BlueNotes podcast that the big-four bank had been using machine learning – the process whereby machines are able to adapt and improve themselves – for more than 20 years.

Machine learning has been [used at] ANZ for 20 years in risk management, in the construct of what we call application scoring; we take profiles of customers [and] we look at how they perform over 18-24 months.

We then determine who’s a good payer and who’s not such a great payer. We then go back and look at the attributes and build statistical models around what are the attributes that help predict that performance and that outcome. So, that’s a pretty good example of machine learning,

Mr Humphrey said some of the techniques such as neural networks and random forests had been around for 20 or 30 years:

“… but because of the complexity of those models, and the position where they are used in an ecosystem, we’ve never had the compute power to be able to run them, say in the construct of real-time decisioning.

Now we do, which is a revolution in itself.

ANZ share price snapshot

The ANZ share price is up 25% in 2021 so far and has gained 72% over the past 12 months.

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Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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