How ANZ plans to fend off competition from other ASX 200 bank shares with fresh tech

There’s a tech race going on in the banking sector.

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Key points

  • ANZ is working on new technology offerings to help improve customer service
  • The big four bank wants to speed up its home loan applications
  • Morgan Stanley thinks its lending margins can increase, though arrears could become pressured

Owners of Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares may want to know how the big four S&P/ASX 200 Index (ASX: XJO) bank share is planning to get ahead of rivals with technology.

There is a lot of competition in the space. Not only are there the other big four ASX banks like Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA), but there are other challengers as well. Bank of Queensland Limited (ASX: BOQ) and Macquarie Group Ltd (ASX: MQG) are two other competitors.

But, ANZ is hoping to win customers while doing nothing. It’s putting effort and money towards upgrading its technology.

Maile Carnegie, group executive of ANZ’s Australian retail, wrote in a recent blog post:

While a rising interest rate environment will provide a temporary reprieve for banks, in the longer-term other trends will have more bearing on returns.

Those trends include intense competition in the lending market place, rising regulatory and compliance costs and capital overlays. We don’t see any sudden lessening in competition, quite the opposite. And it’s also unlikely we’ll suddenly be able to cut our regulatory and compliance costs.

Technology focus

ANZ is trying to improve its offering to customers by improving its speed of product to market, such as getting home loans to customers more quickly.

The big four ASX 200 bank share has been trying to simplify processes and “make it more friendly” for customers. The bank has had to fundamentally rebuild itself with its ‘ANZx’ program.

Carnegie said:

The ANZ Plus platform we launched recently is a result of that rebuild and is about providing better, faster, cheaper and more effective controls for this business as well as keeping pace with what our customers need.

We decided to rebuild half a century of systems technology and processes rather than wallpapering over the cracks. We did this because we knew tacking on automated controls to legacy systems just wasn’t going to work. It required a different solution.

The rebuild of the underlying technology is now complete and we are starting to see the rebuild of the customer applications that sit on top, starting with ANZ Plus savings and transaction accounts.

ANZ is expecting to be able to give customers more features and functionality in the coming weeks, followed by other offerings, including home loans. The big four bank plans to have beta testing for loans in late 2022.

The ASX 200 bank share thinks the new offering and underlying technology will help customers.

Latest view on the bank

One of the most recent opinions has come from Morgan Stanley. It reduced its ANZ share price target to $24.30, with a rating of ‘equal-weight’, which is like a hold rating.

The broker noted that ANZ’s net interest margin (NIM) could rise as the RBA increases interest rates. However, it could cause problems for the loan book in terms of arrears.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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