The Google job not only boosted Carnegie’s tech cred, it gave her exposure to the culture of the US digital giants who now threaten to disrupt financial services worldwide. This combination was to prove irresistible to Shayne Elliott, who became chief executive of ANZ Bank at the beginning of 2016.

Mounting competition

ANZ chairman David Gonski had reached out to Google for advice on how to make established companies more innovative, and Carnegie travelled with the ANZ board to visit Google’s headquarters in Silicon Valley. In March that year, ANZ announced Carnegie would be joining the bank in the newly created role of group executive for digital banking, reporting to Elliott.

Shortly after she started at ANZ, Carnegie told The Australian Financial Review there was no reason why ANZ could not become as innovative as Google, while warning the bank needed to move quickly to fend off mounting competition from fintech disrupters and global tech giants.

To rival bankers, ANZ’s strategy seemed clear. The Melbourne-based bank had recognised the future of retail banking was digital, and Carnegie’s strong tech skills put her in the box seat to take over the running of the bank’s hugely important retail business.

So there was widespread incredulity in the country’s banking community when ANZ announced a new management structure for its Australian operations – the retail and business banking businesses that account for about 70 per cent of the bank’s earnings – a fortnight ago.

Carnegie had been promoted to the new position of group executive of “digital and Australia transformation”, but she would be sharing responsibility for the financial performance of ANZ’s retail and business banking operations with Mark Hand, a more traditional banker who has spent more than 30 years at ANZ.

“Most people expected Mark Hand would do business banking and Maile would do retail,” commented one leading banker, who added that putting Carnegie in charge of the bank’s retail businesses would have given ANZ an excellent opportunity to do things differently.

Some bankers were highly critical that the ANZ had appointed two people – Carnegie and Hand – to jointly run the bank’s Australian operations. They pointed out that this “joined at the hip” model has invariably failed in the past.

Less accountability

One criticism has been that splitting responsibility could lead to less accountability for poor results. “One of the conclusions of the Hayne royal commission was that people often avoid accountability through mixed reporting lines and unclear responsibilities,” commented one rival.

But ANZ’s Elliott strongly defends the management structure, saying that it will benefit the bank’s local operations.

“I understand there’ll be sceptics”, he told AFR Weekend. But, he said, “I know that these two people are talented and have complementary skills. Both believe in building a strong business together.”

And, he adds, it’s an appropriate response to the increasingly complex challenges in the domestic market.

“This is a really difficult market environment,” Elliott says. “The only way this business will succeed in terms of building market share, remediation and transformation is if it’s done effectively in a collaborative and aligned way.

“Where we’ve sometimes gone wrong in the past is that we’ve been a confederation of independent units.”

Bankers who support Elliott’s position note that retail banking is immensely more complex than it has been in the past.

The Hayne royal commission has forced the banks to allocate substantial resources to the arduous and labour-intensive process of remediation while the falling property market has dimmed the outlook for home loan and business lending growth. The latest figures released by the Reserve Bank show that total credit grew by only 4.3 per cent in the year ending January 2019, a substantial slowdown from the 6.5 per cent growth recorded in the year to January 2016.

Dwindling demand

This dwindling demand for loans has ratcheted up the competition between the country’s big banks.

Some bankers say that splitting the job of running ANZ’s local operations has the advantage of allowing Hand to concentrate on building market share and ensuring a timely approach to remediation, while Carnegie can focus on what new capabilities the ANZ needs to develop to transform its operations.

And they note that forcing Carnegie and Hand to share responsibility for ANZ’s financial performance in Australia should result in a more unified approach to difficult choices, such as slowing down the remediation process in order to, say, allocate more resources to developing a new app.

And no doubt there will be such decisions ahead. Rival bankers are quick to note that ANZ – and Carnegie – are at a distinct disadvantage when it comes to technology, because the bank has historically spent far less on tech than its two big Sydney-based rivals, Commonwealth Bank and Westpac.

“The big problem they’ve got is that putting digital on top of old technology is really difficult,” says one banker.

“If you have core systems built in the 1960s and 1970s, with overnight batch processing, it’s quite hard to do. You need to address that issue if you’re going to have a real digital bank.”

The future of banking is digital, this banker adds, but that means digital has to be systematically introduced across all the bank’s processes. “There’s no point having flash apps if you’ve also got thousands of people processing manual transactions”.

Continue to expand

But some analysts believe that ANZ’s comparative disadvantage in tech should not be over-emphasised. Technology is changing so rapidly that even banks which upgraded their systems say, five or six years ago, are now stuck with near-legacy systems. What’s more, technology available now is faster, more powerful and cheaper than it was even three years ago.

Bankers also note that the digital transformation of ANZ’s operations will force Carnegie – who has no hands-on banking experience – to develop a comprehensive understanding of the bank’s lending processes.

She will, for instance, need to fully understand all the steps involved in approving and processing a home loan before she can introduce the best technology to apply.

And because she’ll also be charged with the task of eventually migrating customers from old systems over to the new technology that she has been responsible for developing, Carnegie’s responsibilities will continue to expand.

“She will end up running the future bank,” one banker points out.

But first she has to prove that she has successfully reinvented ANZ’s local banking business.

“She has a huge fight ahead of her”, says one leading banker. “It’s a massive, highly risky endeavour.”

But, he adds, “she’s capable. She’ll get it done.”

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