ANZ funds its technology projects 'like venture capital'

ANZ Banking Group has revealed the “significant work” of its technology and finance teams to more accurately cost IT projects and technology-enabled processes, and pursue faster time-to-value.

Group executive for technology Gerard Florian said in an ANZ BlueNotes blog post that the bank now employs its own “technology CFO” that bridges technology and finance and oversees that cost and value conversation.

Florian said that while there “is a general perception of conflict between the tech function and the finance function - one agitating for vital investment, the other arguing to keep an eye on expenditure” - the two needed to be “on the same page”.

He said the bank’s finance and risk functions were interested in applications of technology in their own areas, as well as “greater transparency of cost” of broader technology implementations across the bank.

“If you run our mobile banking application, what does that cost? Or if you run our home loans business, what does it cost to approve a new home loan?” Florian said.

“In years past, we weren’t easily able to understand that but more recently we've undertaken significant work with the finance team and the CFO to agree on a common fact base.

“Finance can [now] identify where numbers are coming from, what the drivers of cost are and what the likely return on any investment will be. 

“Then we can all work with our investment committee to better shape the future investment plans because we've got deeper, richer data sets.”

Florian noted that this tie-up is “still a developing muscle” within ANZ.

“It’s not something we've always done but we're getting better,” he said.

He credited ANZ’s enterprise-wide adoption of agile for creating closer ties between different parts of the bank, which had made collaboration between finance, risk and technology easier.

The ability to connect different parts of the organisation had meant challenges could be addressed head-on.

“We've had our fair share of bumpy periods where systems weren’t performing as we had expected and the business very quickly wanted to know why,” Florian said.

“We’ve worked very hard to build on that trust.”

More specifically on the cost and value side, Florian said that ANZ had brought in “a technology CFO who reports into the group CFO” to carry on these conversations.

“That technology CFO knows [technology’s] business intimately,” Florian said.

“We sit together multiple times a week to talk through where we're at from a strategy and an execution point of view.”

Florian said that there is now an expectation that technology projects deliver value and a return-on-investment incrementally instead of backloading most of the value in a multi-year project effort.

“The days of a three-year tech project that delivers all its value at the end of year three are gone,” he said.

“Tech projects now need to deliver value incrementally along the way. 

“It might be small initially and get bigger over time but there's got to be some recognition of value being delivered. 

“And that's where finance sits with us to check in and see we are delivering what we said we would.”

Florian also noted that the finance-technology tie-up meant that technology is now “often asked to go away and get sharper on our benefits statement” before funding is approved.

“In the past, we'd make a request for a mega-project – seeking tens of millions of dollars. And you either got it or you didn't,” he said.

“Today we operate a little bit like venture capital. 

“The business says: get started and, assuming you show value, you can keep going. And if you can't show value, then we all agree to stop before the investment goes any further.”