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Shayne’s world: How Shayne Elliott’s ‘agile’ ANZ got stuck

Shayne Elliott wandered the floor at ANZ’s headquarters in Melbourne’s Docklands district. Around him were large boards with squiggly drawings of Apple co-founder Steve Jobs, light bulbs and smiley faces. There were slabs of text explaining squads and tribes and the words “Growth Mindset” were writ large. It was 2017, and ANZ was introducing a new way of working.

Elliott was wearing a bright blue T-shirt promoting this change, which he had pulled over his business shirt and tie. ANZ staff wandered the floor, and some scratched their heads, others frowned; there were so many questions. ANZ executive Kath Bray, who was also on the floor, was being quizzed about a small room on display, which resembled a futuristic phone box. It was where staff could go to make phone calls or have quiet time to think and work separately from their new squad or tribe. Bray admitted it wasn’t for everyone, especially not those who were claustrophobic.

Elliott was into his second year as ANZ’s chief executive, and he was shaking the bank up. He had already won praise for his work to dismantle the controversial super-regional Asian strategy of his predecessor, Mike Smith, and return capital to shareholders. Now he was ambitiously reshaping the bank’s staid culture, by introducing a work practice known as agile, which was largely used in technology companies from Amazon to Microsoft, although it had been adopted with mixed results by some banks such as ING and ABN Amro.

ANZ had around seven to eight layers of hierarchy, and Elliott made it clear he wanted to flatten that management structure. Agile would do this, by breaking down existing business silos within the bank, and bringing staff from different areas, such as product, technology, marketing, sales or payments, together into collaborative teams known as squads and tribes. Eventually, almost 40 per cent of ANZ’s workforce – or 15,000 staff – would shift to this new way of working.

It’s been a disaster. Whoever becomes the next CEO, the first thing they’ll do is to get rid of agile.

Former ANZ executive

Elliott, along with Gerard Florian, the group executive of technology, and Antony Strong, group executive strategy, believed agile would give ANZ a competitive advantage by eliminating bureaucracy to allow it to be more responsive to the customer. In turn, this would mean ANZ could focus on its goals: to “win” and “be the best” in home mortgages and small business lending, by delivering better products and services.

“Our customers want more from us, and they want it faster,” Elliott said in an interview in 2017. “So how do we organise 50,000 people to deliver something quicker? Even when we’ve digitised in the past, we haven’t fundamentally changed the process, so the whole point of being agile is to re-imagine work and say: ‘Let’s not have a sequential process; let’s have the right people in the right place with the right resources, tell them what the problem is and let them go and solve it quickly’.”

ANZ technology executive Christian Venter also claimed that same year one of the benefits of an agile culture was that it would allow the bank’s staff to adapt to customers’ needs, “very, very quickly”.

Five years on, analysts and former employees are asking where are the results?

The bank’s home loan approval systems were, until the end of last year, among the slowest in Australia, and as a result, ANZ lost a substantial share of the $2 trillion mortgage market. It’s now the fourth-largest bank in home lending where it was once third. As well, the bank’s total business lending has shrunk. Its share price is down 17 per cent since Elliott became CEO seven years ago. The bank’s annual profit has grown a modest 5 per cent since 2016. On a range of metrics that measure profit and efficiency, the bank is underperforming. Its technology systems lag its biggest competitors, despite promises that its “agile” teams, including ANZx, would deliver a digital transformation to generate growth and underpin the bank’s residential mortgage business.

A handful of former senior ANZ employees, who spoke to The Sydney Morning Herald and The Age, on the condition of anonymity, believe that ANZ’s cultural experiment with agile working has been a key reason for the bank’s underperformance and failure to achieve its goals.

“It’s been a disaster,” says one former senior ANZ executive. “It doesn’t work and whoever becomes the next CEO, the first thing they’ll do is to get rid of agile.”

Other former senior ANZ employees say the shift to agile work practices have made the bank too inward-looking. They claim it initially left many employees fearful for their jobs, while distracting management from being able to respond to competition in home and business lending. While agile working was supposed to make ANZ more nimble, it instead left the bank “unable to move as efficiently as the other banks because it didn’t have the management structure to do so”. ANZ’s home-loan processing teams were not part of the shift to agile.

“It’s not clear to me that agile actually did much for them in terms of execution,” says another former senior employee. “Where are the outcomes?”

An ANZ spokesman said there were some “teething issues” with the move to agile but overall, it was useful for improving the way the bank worked, especially in its technology and product teams.

“We don’t accept the premise ANZ has underperformed given the significant transformation of our business over recent years,” the spokesman said. “This has resulted in a market-leading institutional business delivering returns well above the cost of capital, while also maintaining our number one position in New Zealand. This transformation has allowed us to rebalance capital back towards Australian retail and commercial where we are investing at record levels.”

At the end of last year, ANZ’s processing times for a home loan application had blown out to 51 days versus more nimble competitors such as Macquarie at seven days. ANZ says it has turned that around by February this year and can now process a simple loan in three days.

But as one former employee says: “I don’t understand why it has taken them so long to fix it.”

Since Elliott became CEO in January 2016, ANZ’s market share in home loans has declined from 15.5 per cent to 13 per cent. Of the four major banks, ANZ currently has the smallest market share in home and total business lending, according to Macquarie Research.

ANZ is now trying to claw back lost market share, with a $4.9 billion bid for Suncorp’s bank. Elliott has pitched the deal to the market as being a good “cultural” fit. Not everyone is convinced.

“Perhaps they’re too motivated by trying to have a bigger market share figure in housing than the shareholder value it creates,” says Brian Johnson, a veteran banking analyst, who works for Jefferies.

Johnson has an underweight ranking on the Australian bank sector. Of the four major banks, his least preferred stock is ANZ. “You haven’t seen their market share improve. Their mortgage servicing is yet to actually improve, and they’ve abandoned their $8 billion cost target for 2024.”

Johnson also is unimpressed with the recent release of ANZ Plus, ANZ’s new retail banking platform.

Last year, ANZ also launched GoBiz, a new digital lending platform for small business. Elliott lauded the development of GoBiz as a good example of what the bank’s agile work culture could produce. Elliott wrote on the in-house publication bluenotes, that the bank’s agile culture had allowed 45 tribes and tech areas across ANZ to collaborate and enabled the integration of 18 different internal technology systems with four external partners to create GoBiz.

“There is no doubt in my mind we are a far better bank today because of new ways of working,” Elliott wrote. A Macquarie Research report published this month shows that ANZ’s total business lending market share fell over the past 12 months.

While home and total business lending market share have declined under Elliott’s leadership, the bank’s profit has grown modestly. Its cash profit has risen 5 per cent in seven years to $6.18 billion. Its return on equity has fallen from 10.3 per cent to 9.9 per cent. Its net interest margin, an indicator of profit and growth, has declined from 2 per cent to 1.64 per cent. ANZ’s shares are down 17 per cent since Elliott took the top job, and have underperformed the broader ASX 200 and banking indices. Westpac is the only other major bank whose shares have performed worse.

ANZ’s expense-to-income ratio has risen from 50.8 per cent to 51.9 per cent, even though its workforce has shrunk by about 10,000 people since Elliott took the baton from Mike Smith. The ratio of women ANZ employs in leadership positions has declined through that period from 41.5 per cent to 35.3 per cent. The bank has lost key executives such as chief financial officer Michelle Jablko, now Transurban’s CFO, and its deputy chief executive Alexis George, now AMP’s CEO.

I don’t rate ANZ as an agile organisation. In fact, I would say that they’re quite sluggish in terms of some of the things that they’re doing.

Martin North, DFA Analytics founder

Martin North, founder of DFA Analytics, a boutique research firm, is also critical of ANZ’s sluggish performance. “I worry that there is a disconnect between the aspiration at the top of the organisation and the organisation’s ability to actually follow up and deliver,” he says. “I don’t rate ANZ as an agile organisation. In fact, I would say that they’re quite sluggish in terms of some of the things that they’re doing.”

North says ANZ management made commitments to shareholders and customers after the bank withdrew from most of its Asian operations. “ANZ was the one that pulled in its horns from Asia and said, ‘We’re going to focus very firmly on the Australian banking environment, and we’re going to grow our book through mortgage origination’,” says North. “They didn’t really, in my view, follow it up with sufficiently reengineered systems and processes to be able to make that work, in both a cultural and technical sense.”

DFA Analytics surveys households on customer satisfaction with different banking products and services. In July, it surveyed 52,000 households, and the results showed that among 18 banks, ANZ ranked in the bottom three on products and services.

In March, ANZ’s group executive retail and commercial banking, Mark Hand, departed after the bank’s lacklustre performance in home lending. Maile Carnegie is now the ANZ’s head of retail. However, Carnegie had shared responsibility for the financial results of ANZ’s retail and commercial businesses in Australia with Hand since 2019.

Her prior role, as group executive for digital and Australia transformation, included this responsibility as well as taking control of the retail and commercial divisions’ data and analytics, marketing, brand, advertising and sponsorship.

Carnegie has been with the bank since 2016, although she has no background in banking. She had previously spent most of her career at Procter & Gamble and then three years at Google.

In June this year, Carnegie, who has been in digital banking and digital transformation roles at ANZ for six years, revealed the bank had to clear more than 1300 obligations to get the average mortgage approved, the vast majority of which was still being done manually with paper and people. With an increase in demand for home loans, ANZ executives admitted the bank struggled to respond.

Since 2019, ANZ executive Maile Carnegie had shared responsibility for the financial results of the bank’s retail and commercial businesses in Australia.

Since 2019, ANZ executive Maile Carnegie had shared responsibility for the financial results of the bank’s retail and commercial businesses in Australia.Credit:Renee Nowytarger

And yet in 2019, Elliott had stated that the bank was in a better position to manage increased demand for home loans after it consolidated three mortgage origination systems into one. “We’re back, we’re ready, and we’ve beefed up our processes, so we can handle the volumes, and tidied up our risk appetite, so we can approve deals,” he said in an interview.

At various times over the years, Elliott has been cautious on the housing market, expressing concern in 2016, 2018 and 2019 about the leverage of households.


When Elliott became ANZ’s chief executive in 2016, he was about as different as you could get to his predecessor, Mike Smith. Smith was a stoutly, old-school banker, who was tough, charismatic with strong convictions. Elliott was more of a new-age banker. A lanky, intellectual, open to new ideas, who was super-fit and a vegetarian. He even agreed with Microsoft co-founder Bill Gates who said that “the world needs banking but not banks”.

Elliott had joined ANZ in 2009 as the head of institutional banking, after a long career working globally for Citigroup. This included a stint in Egypt where Elliott met his wife, Najla, an economist. Within three years of working at ANZ, Elliott rose to the role of chief financial officer, and in another three years was CEO.

Now 58, he’s run ANZ for almost seven years. It’s almost as long as Smith, who was in the role for eight years and three months. “People thought that [Shayne] was going to stay for five years,” says a former ANZ employee. “He was always critical of Mike for staying too long. Now, he’s buying Suncorp’s bank, and you’d think he’d have to stay at least two years to do the integration. You don’t buy it and leave.”

Not everyone agrees that Elliott has to stay to do the integration of Suncorp’s bank, if the takeover is successful. “At the end of the day, you’re buying a pretty small regional bank and they’re going to run this thing separately for almost five years,” says Jason Beddow, managing director of Argo Investments.

Talk of succession grew last year after Elliott flagged that he was looking at the issue. Among the internal contenders to replace him are Antonia Watson who runs the New Zealand operations, Maile Carnegie, and Mark Whelan, head of institutional banking.

Watson remains the frontrunner, say industry observers, who offer the following reasons why. Whelan is considered too old. However, at 62, he’s the same age that Ross McEwan was when appointed National Australia Bank’s CEO. Although McEwan had previously run the Royal Bank of Scotland.

Carnegie is considered unlikely. While a popular and capable executive, she is not a career banker. Nor is ANZ’s chair, Paul O’Sullivan, which raises the question for ANZ’s board: would you have two people overseeing a big four bank who are not bankers?

Antonia Watson, head of ANZ in New Zealand, is considered the frontrunner to replace Shayne Elliott.

Antonia Watson, head of ANZ in New Zealand, is considered the frontrunner to replace Shayne Elliott. Credit: Edwina Pickles

When Elliott steps down, people will look back at his time to examine his legacy, aside from introducing an agile work culture to the bank.

When he became CEO, Elliott had a big to-do list. He had to build a new management team, unwind Smith’s Asian strategy, refocus the bank on expanding in home and business lending in Australia and New Zealand, and decide how the group would invest in technology to generate growth. Under Smith, the bank’s core technology platform had been neglected.

However, there would be scandals, court cases, a royal commission and a pandemic that would make the job more complicated. Within weeks of Elliott becoming CEO, two traders, who had been sacked from ANZ’s institutional division for inappropriate behaviour, sued the bank for tens of millions of dollars, claiming a rampant culture of sex, drugs and alcohol was condoned among senior staff on the dealing floor.

Then another court battle grabbed the headlines, as ANZ was in disagreement with Indian socialites the Oswals over their Australian fertiliser business. The Oswals had accused the bank of “racial bigotry”. ANZ settled the case.

There was an apology over how a sexual harassment case involving a trader in ANZ’s New York office was handled. ANZ also settled a case with broker Angus Aitken, after he sued the bank over a tweet that alleged he was “sexist”. ANZ later apologised for the tweet.

There was also a corruption scandal engulfing AmBank in Malaysia, of which ANZ owned 22 per cent. AmBank eventually settled with the Malaysian government over its role in the alleged theft of $US4.5 billion ($6.5 billion) from the state fund 1MDB. ANZ wrote down its investment.

Under Elliott, ANZ had successfully exited most of its minority Asian bank investments except for AmBank, and a 39 per cent interest in PT Bank Pan Indonesia. Elliott was a director of AmBank but stepped down when he became ANZ’s CEO.

But the problems for ANZ were far from over. Its New Zealand boss David Hisco would resign over an expenses’ scandal, and was replaced by Watson.

Elliott issued apologies for the bank’s behaviour in an industry-wide fees-for- no-service scandal, as well as inappropriate advice given by some of its affiliated financial planners. Elliott fronted the royal commission and performed the best of all the bank CEOs. “The board was like, ‘Thank God, we’ve got him and not [NAB’s Andrew] Thorburn or [Westpac’s Brian] Hartzer’,” recalls a former employee.

And then there was the pandemic and the major banks were at the centre of ensuring the stability of the economy during unprecedented times.

While dealing with those events, Elliott and his management team were simplifying ANZ’s structure, selling off businesses not just in Asia but also in Australia and New Zealand, including OnePath, the wealth and insurance arm. They were cutting costs, investing in technology, and reshaping the bank’s culture.

But for all of those changes, including the agile transformation, over the past seven years, analysts, investment bankers and shareholders are asking why the results aren’t better?

“Shayne and his team did a really good job unwinding Smith’s grand Asian legacy, but after that was Shayne the right guy to take it ANZ to the next level? I don’t think so,” says one investment banker, who declined to be named. “Nobody’s going to turn around and say that Shayne organically built ANZ into a great business, which they may yet do with Ross McEwan at NAB.”

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