Interview with Peter Dalton, CIO of ANZ Bank

FST Media: As ANZ's CIO since late 2006, you have inherited the bank’s offshoring subculture that has seen approximately 1,000 positions offshored to Bangalore, India, in the last two years. Can you explain the inspiration behind ANZ's offshoring initiatives and whether we are likely to see other areas within your division offshored in the next 12 to 18 months?

FST Media: As ANZ's CIO since late 2006, you have inherited the bank’s offshoring subculture that has seen approximately 1,000 positions offshored to Bangalore, India, in the last two years. Can you explain the inspiration behind ANZ's offshoring initiatives and whether we are likely to see other areas within your division offshored in the next 12 to 18 months?

DALTON: ANZ is a global company and choosing locations overseas for some of our functions is appropriate for us, provided that jobs that ANZ has in Australia and New Zealand are growing, which they are in all cases. Our campus in Bangalore, which is a wholly-owned part of ANZ’s organisation, helps us take advantage of the fact that Bangalore has become a global technology hub, particularly for the banking and finance industry. Also, India produces a large number of very skilled IT graduates each year, many of them with two degrees or more. 

Obviously there are also cost advantages for us in doing this, but it’s a combination of these things that we feel makes it a compelling reason behind our program over the last few years. You also need to remember that we have had technology functions in India for over 17 years, so it’s not something that’s recent. Today, we’ve got about a third of our technology staff in Australia, a bit under a third in New Zealand, and about a third in Bangalore. Regarding your question about the future, we believe that’s about the right balance for ANZ's technology operations for the foreseeable future.

FST MEDIA: What stage is ANZ at with regards to meeting the Federal Government’s AML/CTF legislation and are you able to approximate how much the compliance initiative will cost?

DALTON: ANZ is well advanced in defining and planning the delivery of the components of our anti-money laundering program, in order to make sure that we comply with the legislation. 

* To date, we have put in place updated policies and processes which cover ANZ’s global businesses and are currently rolling out awareness and compliance training for more than 18,000 staff over the next six months.
* ANZ expects the implementation of programs and systems to meet the new AML obligations to cost more than $66 million over the next three years.

FST MEDIA: You were quoted saying that one of ANZ’s largest implementations will be the phasing out of ANZ's ageing personal computer-based cash management system and replacing it with internet technologies that mirror your personal banking portal. What kinds of benchmarks are typically relied on to ensure a project of this magnitude is on time and on budget?

DALTON: ANZ has an organisation-wide approach to our project management and it’s based on industry best-practice frameworks that covers things like project governance, the methodology we use, the reporting, etc. The governance framework that sits within this structure contains a series of controls to ensure that we’re doing the right things in the right way to deliver the intended benefits. These controls include the funding of projects on a phased basis, so we don’t give the project all the funding upfront. We release funding for example for the design phase and then ask them to come back and request funding for the build phase, etc. We also conduct regular reviews by independent parties of projects on their progress; how they’re going against their plan and we have an internal area, operations and technology risk, to help surface project issues and help projects with challenging problems. We also want to take regular reporting on the cost of projects against budget, time and of the benefits, and we have fairly comprehensive reporting on the risks and issues associated with projects so that they’re all well-known and well-understood. Finally, we make sure that we have a steering committee comprising of six members of ANZ senior management to really guide the project – to look at its current status, plans, its risks and issues. ANZ’s CEO, Mike Smith, outlined his vision for technology to be a core source of advantage for ANZ in December 2007 and we have since taken steps in that direction. We have undertaken a program of simplification and we are focused on building the capabilities that will underpin ANZ's goal of becoming a super regional bank. Over recent years ANZ has already replaced all if its original in-house systems with vendor-based packages and therefore we have no "burning platform" in regard to core systems.

ANZ has some of the most stable systems of any bank in Australia having achieved a reduction of more than 30 per cent per year over the last three years in high-impact incidents that affect staff and customers.

FST MEDIA: What do you identify to be the three most critical technology trends likely to impact the financial services sector within the next 12 months?

DALTON: There are many trends likely to impact banking and finance services within the next 12 months, however there is one in particular that we believe stands out – we call it the consumerisation of computing. Some of the research that we’ve done says that more households are connected to broadband than ever in Australia and that the computers are moving out of the study, or the work environment, to become the centre of the family home and entertainment. Australia has more than 15 million active internet users from either home or work, or both. The interesting thing from our perspective is that in the younger demographics, the internet exceeded TV viewing in 2007. Just think about that for a minute. It’s a fairly substantial change in the way people are behaving at home. The important thing for banks is that banking is the second most common internet activity behind looking at news, sports, weather, etc. Bill payments is the third most popular internet banking activity, so we believe that this trend will have the greatest impact on the financial services sector within the next 18 months or so.

FST MEDIA: What are your thoughts with regards to mobile banking solutions, particularly the challenges and the maturity of the solutions that are currently on offer?

DALTON: We look fairly closely at the role of technology, such as mobile phones, can play in delivering convenient and more importantly secure banking solutions for our customers. With 2.7 billion mobile phones users around the world we also see a huge opportunity in the mobile phone banking market and have built on our success in New Zealand by launching mobile banking in Australia and exploring other opportunities across Asia.

FST MEDIA: You were among the first wave of CIOs to embrace Green IT, having moved to switch off the screensaver function on 31,000 PCs. This not only reduced ANZ's annual electricity bill by some 4 per cent but also provided a quick win for the environment. Was this a one-off consideration for the environment, or is there room within ANZ and the broader IT sector to support more eco-friendly initiatives?

DALTON: Our screensaver initiative built on some existing measures implemented by ANZ as part of our overall commitment to reduce our environmental footprint, and our impact on climate change. A couple of other initiatives we’ve done already include converting all of our Australian leased computer screens from the older CRT screens to liquid crystal displays –- we save up to 50 per cent energy use as well. We introduced PC Snoozer, which actually switches our PCs off automatically if people don’t remember to do it overnight and before weekends and we are actively looking at much greater use of vide