The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is not joining the market rally this morning after the bank unveiled a new fintech platform.
Shares in the big ASX bank have dropped 0.36% to $27.36 in early trade, while the S&P/ASX 200 Index (ASX: XJO) has jumped 0.78%.
ANZ announced today that customers can register for its digital banking service called ANZ Plus. The mobile app will be available from early 2022.
New tech to support ANZ Bank's share price longer-term
ANZ Plus is one of the offerings on the bank's new technology platform ANZx that's aiming to help the bank better compete in the digital space. It's a move to shore up its position amid new fintech upstarts and even other big banks like the Commonwealth Bank of Australia (ASX: CBA) which have been stealing its market share.
The new app aims to give customers better oversight and control over their money. Customers can manage spending, get detailed transaction data, set saving goals, be alerted to upcoming bills and more.
But there're a few interesting takeaways from ANZ Bank's digital transformation that investors should be aware of.
Trying to regain the IT edge
The new tech platform is seen as ANZ's bid to compete with the IT prowess of CBA, regarded as the tech leader in the domestic banking space. It is CBA's tech superiority that accounts for much of its valuation premium to other ASX banks.
While CBA rebuilt its core IT systems more than 10 years ago, ANZ hasn't committed to such a major upgrade.
The workaround is ANZx which builds on the bank's existing systems and, reportedly, allows it to become "future ready".
The new platform is much cheaper to build and is funded from efficiency savings from other parts of ANZ Bank's operations. The possible downside is that it may be riskier given inherent difficulties in getting new systems to work seamlessly with the old.
The 10-minute loan from ANZ
ANZ Bank is counting on the new platform to help it turn around its struggling mortgage processes. The bank is the only one of the big four ASX banks to lose market share for mortgages. This is largely because it takes a sluggish 51 days (median) for the bank to approve loans.
According to the Australian Financial Review, the bank's new app should be able to cut this down to just 10 minutes.
It can do that because app users will essentially be giving the bank significant oversight of their personal details and finances.
Users may have to decide how comfortable they are about privacy boundaries. In any case, it will still take about a year for that feature to arrive on the app.
Fight back for the ANZ Bank share price
There's another key reason behind ANZ Bank's large digital investment that may not be as obvious. This relates to its over-dependence on mortgage brokers.
The app has the potential to circumvent this channel which will go a long way in helping the bank protect its precious net interest margin.
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