‘It’s a bit like a home renovation’: What does the future look like for ANZ shares?

Shares of Australia and New Zealand Banking Group Ltd (ASX: ANZ) are under the spotlight as the big ASX bank share tries to catch up with its rivals.

The bank has been working on transforming its operations by using technology to improve its customer service and accelerate change.

As reported by The Age, according to Macquarie Research and APRA, ANZ’s market share in housing declined by more than 100 basis points (or 1%) over the year to 31 July 2022.

The bank’s leadership team has been considering how to regain momentum and get the bank back to underlying growth.

A focus on technology

ANZ’s chair Paul O’Sullivan, who has been in the position since October 2020, said (according to the Australian Financial Review):

We’re transforming the bank to make sure that it’s able to lead the next phase. And I’m not ashamed of saying to the staff we should be aspiring to lead in what we do. What does that mean?

That means you’ve got to have a really modern technology capability internally, which reflects the speed at which society wants to engage and reduces friction. You’ve got to have a really deep understanding of the financial wellbeing needs of the community and how you meet them.

And you’ve got to be socially responsible and good at meeting community issues. And so, we get that right, then we set that up really well for the longer term.

However, O’Sullivan has acknowledged that customers are underwhelmed about ANZ Plus, though it’s the behind-the-scenes technology changes that are exciting people within ANZ.

O’Sullivan said the current situation within ANZ is like a “home renovation where you’ve knocked down the back of the house and your mates all think it’s just taking forever”. However, the ANZ leadership figure thinks it’s worth spending time on and getting right because it’s what ANZ could end up using for the next two or three decades.

The bank could have spent money on an off-the-shelf platform, but ANZ wants to be able to customise its offering for customers and do things that are “innovative”.

O’Sullivan said:

I think it’s the right decision. Invariably, you’re going to get a bit of a shellacking on the way through because it is different. It does take time, it’s been more complex. But once it’s done, coming back to the transformation, I think that puts us in a really strong position to be able to do things that are different and innovative with its customers.

Some brokers have suggested that ANZ is buying the banking division of Suncorp Group Ltd (ASX: SUN) to recapture some of the lost market share.

But, while O’Sullivan did acknowledge that the takeover increases ANZ’s exposure to households and increases exposure to Queensland, it’s not just about getting bigger for no reason – he believes it’s the right thing to do for the long-term interests of the business.

Recent broker rating

One of the latest brokers to have their say on ANZ is Macquarie, which rates it as a buy with an ANZ share price target of $24. That implies a small rise over the next year.

It thinks that banks can profit from increasing central bank interest rates and slower increases for savers.

The post ‘It’s a bit like a home renovation’: What does the future look like for ANZ shares? appeared first on The Motley Fool Australia.

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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. 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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