ANZ has spun off its ventures and investment arm ANZi into a separate entity, as the bank moves to forge stronger fintech partnerships and accelerate its own digital transformation initiatives.

Ron Spector, managing director of ANZi, will stay on to head up the newly independent ventures arm, which has been re-christened 1835i.

While formally divested from the bank, 1835i is expected to remain just outside ANZ’s “gravitational pull”.

The bank will solely fund 1835i’s investments and oversee its governance.

ANZi was stood up in late-2019 with the dual mandate of incubating innovative business models whilst identifying revenue streams from outside traditional banking, namely through collaboration with digital upstarts.

According to Spector, ANZi’s existing in-house arrangement was hindering it from “moving faster”, given the cumbersome processes inherent to traditional banks.

He believes 1835i, as a standalone unit, would give the bank an upper hand in a competitive marketplace to recruit and retain the best talent, as well as promoting other benefits such as speed, business efficiency, and slashing costs to innovate.

“I don’t think anybody is struggling with the strategy of what financial services institutions need to do to respond to the digital revolution and disruption from technology platforms,” Spector said.

“It’s all about execution, and [that] comes down to the people.”

Speaking in an ANZ Bluenotes podcast, he said the bank’s unique culture of innovation, which has been refined over the last four to five years, remains one of the key drawcards for smaller companies seeking industry partnerships and, indeed, mentorships.

“[ANZ] is perceived as a bank undergoing transformation… culturally, technologically and in simplifying the business.

“We also worked hard to add a lot of value outside the context of a relationship with ANZ. There’s a general appreciation… [that] we go in and help young companies grow and prosper,” Spector said.

Culture aside, he praised the design of ANZ’s ventures unit, which he said has enabled it to “solve problems and take advantage of opportunities that benefit the bank faster”, drawing on mistakes and learnings from other companies that experienced the early years of bank venture capital models.

“The [thing we do] differently is the integrated function, [which] works around a specific strategic thesis articulated by [ANZ chief executive] Shayne Elliott and his executive committee,” Spector said.

On the same podcast, ANZ group executive digital and Australia transformation, Maile Carnegie, said that this renewed innovation approach would “accelerate development of testing and digital solutions”, helping the bank “improve customer experiences at lower costs”.

She expects that business partnerships will give ANZ an edge through data and engagement, enhancing the bank’s core business in the next three to five years and thus deliver shareholder value.

To Carnegie, partnerships are where banks globally can “win the war” in the years ahead.

ANZ’s move to create an independent, venture-scaling unit follows a similar move by rival lender CBA, which launched its own X15 Ventures unit in partnership with Microsoft and KPMG in February last year.

In May this year, X15 released ‘xStack’, a platform which sits on a securely built technology stack, that allows startups to continuously innovate whilst operating within regulatory constraints inherent to Australia’s banking sector.

ANZi, on the other hand, has spent upwards of $275 million since its inception investing into eight local start-ups: Aider, Airwallex, BUD, Cashrewards, Divipay, Lendi, Slyp, and Valiant.

It has also launched three companies: digital home loan distribution platform OneTwo Finance, property comparison outfit theOne spot, and digital offer solution Propps.

In a LinkedIn post, Spector revealed that the name ‘1835i’ was a nod to the bank’s near 200-year history, recognising The Bank of Australasia’s (ANZ’s founding name) establishment under Royal Charter, and one that embraces ANZ’s “spirit of adventure and innovation” .

Spector, who has so far appointed three partners to assist him in the breakaway incubator, also revealed that 1835i will house two distinct functions: 1835i Creation Lab and 1835i Ventures.