Personal Financial Services

1
Personal Financial Services - Achieving growth
Peter Hawkins Head of Personal Financial
Services 18 July 2000
2
Todays agenda
Specialisation and growth 1) Product
businesses 2) New customer businesses 3) Tomor
rows growth
3
1) Specialist product businesses

• Cards
• Mortgages
• Funds Management and Insurance
• anz.com

4
In November 1997 we separated product from
distribution

• It has delivered
• Higher profits/ lower costs
• Strong individual product businesses
• Doubled sales
• 200,000 more customers
• Increased share of wallet
• More recently, customer segmentation was overlaid
  on distribution

5
Financial performance
Income
Profit
m


Net Interest Margin (LHS)
Non Interest Income (RHS)
Provisioning
m
Costs


Cost to Assets (RHS)
Cost to Income (LHS)
Actual Credit Costs
Economic Credit Costs
6
Cards

Share of Personal Profit
Key Initiatives and Strategy

• Continue to improve and leverage QTV programs
• Build leadership in e-commerce acquiring and
  other high growth merchant acquiring segments
• Implement common operating platform (Vision Plus)
  in Australia and New Zealand
• Acquisition through cross-sell to other Personal
  customers
• Leverage acquisition of EFTPOS New Zealand

Cards Growth AUS NZ Cardholders
(m) 2.0 0.3 Cards Issued (plastics) 2.9 0.4 Outsta
ndings (b) 2.4 0.3
(Growth) 35 12
7
Mortgages
Market Share

Share of Personal Profit
Apr-00
Key Initiatives and Strategy
New Sales by Origination Source 1H 2000

• Leading products
• Broad distribution
• Active database marketing campaigns
• Cost management
• 4 account processing systems into 1
• 4 processing centres into 2
• 24 reduction in cost/asset ratio (1st half)
• 28 annual increase in Auto Approval rate
• Funding flexibility

Origin 14
ANZ Network 63
Third Party Introducers 23
ANZ Branded
8
Mortgages
Channel Comparison
New Lending Mortgage Margins


Origin
TPMI
ANZ Network
Drawdowns ()
Drawdowns ()

• Cross sell of third party mortgages has been
  effective
• 86 customers have an ANZ deposit account
• 51 have an ANZ credit card

Average Loan Life EVA

Index 100
9
Funds Management
Funds under Management
Share of Personal Profit
m
15000
10000
5000
0
Mar-99
Sep-99
Mar-00
Total Retail FUM inc Gateway
Total Retail Wholesale FUM

• Strategy
• Leverage bank distribution strengths/customers
• Optimise products and features
• Reposition Asset Management
• Leverage off universal a/c and targeted marketing
  to grow IFA channel

• Ranking
• Assirt Retail FUM 7
• Assirt Retail Inflow 10
• New experienced management team in place

10
anz.com
Active Users
Internet Banking Signups
Internet Banking
Phone Banking
Internet Banking Users of Total Relationships
Internet Transactions ( of Total)
Source Ord Minnett and Roy Morgan Research
11
anz.com
Online Applications - Credit Cards
Internet Banking Customers
Number of Products
myanz.com
Lending
Deposit
Profit
Attrition
Balance
Balance

• Their share portfolio via ANZs My Portfolio
  service
• Sport news
• Search engine
• Weather
• Favourite links
• Travel information

• Their ANZ account balances
• Australian and overseas news
• Stock prices, market wrap and watchlist
• Horoscopes
• Entertainment news
• ANZ products and financial tools

ANZ ETrade
12
myanz.com
13
The separation of product from distribution has
driven strong performance across products while
increasing the network effectiveness
Index
14
2) New customer businesses

• Wealth Management
• Small Business
• General Banking

15
We are now moving from a product/ distribution
focus to product and customer focus
3 Product Businesses
3 Customer Businesses
anz.com
Cards
Mortgages
Wealth Management
Small Business
General Banking
Funds Management
Personal eCommerce

• Creation of three customer businesses
• wealth management
• small business
• general banking
• Keeping strong product monolines
• operational efficiency
• functional expertise
• third party distribution
• Drive to market leadership for anz.com

Small Business
Wealth Management
General Banking
16
Develop a Wealth Management offer that will truly
differentiate us
Share of Personal Profit

• Strategy
• Schwab-like offer, but with higher level of
  lending
• extensive third party offering for FM I, in
  addition to proprietary FM product
• heavily bricks-and-clicks
• underpinned by Universal Account CMA
• offers customers choice from a menu of options
• advice
• product
• value

Share of High Net Worth Customers
CBA
Westpac
ANZ
NAB
St George
Source Roy Morgan Research
17
Recapture Small Business market share
Share of Personal Profit

• Strategy
• Make separate Business Unit for focus
• end-to-end product and service delivery with
  control over all levers of business
• full relationship-based offer with
  segment-specific products
• develop third-party originator channel
• coalesce small business e-Commerce
• integrated seamless offering across relationship,
  branches, call centres, internet
• 50,000 customers already online (20)

Small Business Share of Debt

Source Greenwich Associates
18
A General Banking business focused on continuing
to improve productivity and the customer
experience

• Strategy
• optimise sales and service delivery for general
  banking customers
• formation of unit with accountability for
  infrastructure supporting majority of customers
• control over both distribution and transaction
  products creates single responsibility for
  customer experience and migration to
  self-serviced channels
• leverage information analytics capabilities for
  sales efficiency

Share of Personal Profit
Share of Mass Customers
Branch Activity
CBA
WBC
NAB
ANZ
St George
Branch Withdrawals (m)
No. A/cs (m)
Transactions per A/C
19
3) Tomorrows growth

• Building capabilities

20
The CRM capabilities we are building deliver a
comprehensive, end-to-end revolution of the
customer experience and relationship

• Create a seamless customer experience across
  channels, products, service and sales
• Recreate relationship management by providing
  insightful customer information at all touch
  points
• Change the selling paradigm when theyre in
  your space, be ready to sell
• Focus proactive selling through rich profiling
• Align credit and pricing decisions to the risk,
  behavioural, and value profile of the customer
• Deliver straight through processing to both
  improve service levels and reduce costs

Our Objectives
21
The customer database provides a mature data
warehouse environment

• established 1996
• group-wide coverage
• comprehensive customer and product data
• customer profitability

22
Campaign management provides comprehensive data
analysis and modelling

• continuous marketing capability
• Valex campaign management tool
• multiple daily targeted campaigns
• trigger events

23
The customer decisioning engine provides central
customer management capability

• Strata software decision engine
• sophisticated models to
• profile customers
• predict behaviour
• create actionable decisions

24
Customer value drives how the customer base is
segmented and managed

• Examples of customer initiatives
• propensity of buy models to target offers to best
  prospects
• attrition risk predictors to get in early if good
  customers look shaky
• target offers of better sales and service to
  qualifying customers

25
Enterprise factory operations support
differentiated selling and servicing by customer
segment

• Examples of operational decisions
• make better credit assessments, for a new card,
  or transaction authorisation
• replace a one size fits all approach to
  collections with a segmented approach

26
Customers are afforded multiple access channels
and managed to maximise relationship value

• Sales and Service Platform
• browser based
• Getronics
• multi-channel
• Processing efficiencies and enhanced customer
  experience

27
This is a substantial program which will deliver
end-to-end transformation

• reengineering and automating servicing and credit
  fulfilment processes
• total capital investment in excess of 200
  million
• deployment of over 100 million in improved
  infrastructure to deliver a paperless environment
• communications bandwidth to branches
• specialist peripherals such as scanners
• high performance workstations at all touchpoints
• windows 2000
• middleware
• payback of about 2 years
• sales uplift of 5 in business case
• other organisations have experienced up to 25
  uplift
• implementation begins November 2000, completed by
  end 2001

28
Summary Personal Financial Services

• Specialist Product Businesses well established
• Customer Businesses being elevated
• Capabilities being built to drive tomorrows
  growth