[Australia’s] engineering talent is world-class – which may come as a surprise to some people… and [that includes] senior engineering leaders and thinkers who really want to challenge traditional approaches.
In the lead-up to his featured keynote at FST’s 2022 Banking Summit, we sat down with ANZ’s recently appointed tech chief, Tim Hogarth, to explore his ambitions for the bank’s fast-evolving digital ecosystem, including the “revolutionary” leap forward promised by ANZ’s new Plus offering, on unleashing the bank’s innovation potential through cloud, and Hogarth’s high praise for Australia’s world-beating software engineering talent.
FST Media: Congratulations on your recent appointment as ANZ’s CTO! A massive coup for you and ANZ.
As you settle into the role, how do you hope to stamp your mark on ANZ’s forward technology agenda?
Hogarth: Thank you very much! Technology is a critical component of every single part of business in any kind of competitive play. And I believe ANZ has the right base to operate and compete emphatically using technology.
I want to help shape ANZ’s technology play to empower greater market reach and a bigger impact. This is about turning that mantra that everybody talks about into market outcomes. It’s about ensuring we can take ANZ’s data assets and turn them into something that can really power the next generation of banking.
There’s a significant amount of work we can do with automation, given that banking is fundamentally a virtual good.
We’ve still got a lot of manual processes we’ve inherited, and as we move to fundamentally reshape banking, we’ve also got to fundamentally reshape our processes.
We’re also at the cusp of a very important time, as the industry moves from a tradition of hosting and managing its technology on-premise, in what is traditionally a very capital-intensive business, to one where we rent technology and operate in a much more dynamic environment online. That will come with a lot of opportunity and significant challenges as we see a shift in the roles and responsibilities between the consumers of technology, such as ourselves, and the providers of technology from industry.
I want to help shape the whole of ANZ’s journey to cloud, making sure we maximise the value for both shareholders and the customer as we adopt a range of amazing new types of software. We’ve also got an absolute responsibility to continue to elevate the bar when it comes to liability and reliability.
FST Media: Noting the very recent release of ANZ’s Plus offering, a key building block for the bank’s future innovation, what excites you most about the scope and ambitions of ANZ’s technology agenda?
Hogarth: ANZ Plus is really a significant technology investment and one that excites me greatly. It will empower a range of new customer experiences, and what you see now is just the tip of the iceberg.
The fundamentals are quite significant. As part of the ANZ Plus offering, you’re going to see several enduring and ongoing improvements entering the market soon.
Some of the architecture [of ANZ Plus] is quite revolutionary and very different to how a traditional bank approaches this.
But it’s fundamentally about empowering the customer to have a lot more information about their banking applications.
Our team has done a lot of work to shift the way customers manage account data and transaction data, recognising there is a lot of power in having that information at customers’ fingertips; this is something that traditional banking architectures can’t do.
The fact that the application and all of the supporting systems have been cloud-first wherever possible and practical there’s everything about this is cloud-centric. And it’s taken a fresh set of eyes and a fresh set of thinking and shattered a lot of the assumptions of the past. To me, it’s about rethinking the way you build a banking experience in this era, and in rethinking all of the assumptions that have held us back from the previous century.
FST Media: And there’s clearly been a lot of attention paid within the ANZ Plus app to assist customers with cashflow management, including the integration of AI-backed payment prompts, and the creation of a rich graphical interface to neatly display transaction and spending patterns.
Hogarth: A lot of what we have in banking is about helping customers understand banking. The best relationship between a bank and a customer is when a customer feels in control and really understands how best to use the banking products they’ve got.
Instead of just dumping information at a customer’s disposal and letting them work it out in a very pro forma approach, the ANZ Plus experience is deeply engaging.
But it’s not just the aesthetic; it’s the way information is presented and made available as well as the tools that help the customer manage their accounts and their money, and in enabling them to anchor their financial progress to their life goals. This is more than just a facade, which many other banks have historically taken. This is rethinking the fundamentals to give our customers long and enduring outcome. I’m really excited by the technology and how it’s enabling that vision.
FST Media: Looking back at your time as Chief Architect of ANZ, how did this role shape your approach now as CTO, particularly as an innovator and enterprise transformer?
Hogarth: Architecture can perhaps be a rather loosely defined discipline, but it generally requires a combination of analytical skills, a degree of subject matter expertise in technology and in business, and necessarily some forward thinking.
While we call it architecture, that combination of skills is really about working out the best solution given a number of parameters that are often inflexible. For instance, you never have infinite budget, you never have infinite time. You’ve always got an existing incumbent solution, even if you’re working with relatively new systems.
FST Media: And how effectively has ANZ’s Architecture and Engineering Centre of Excellence – which you previously led – driven the bank’s development of novel, potentially transformative, capabilities and applications?
Hogarth: ANZ’s engineering talent is exceptional. It’s also quite broad; we have a significant number of people in a range of engineering disciplines. And there are many, many people there prepared to challenge traditional thinking rather than just resort to convention – those who challenge the way we’ve done things and really seek out greater pools of value.
I’m privileged to be in a position where I can highlight and elevate those conversations with engineers and architects to drive significant value. A stand-out example currently is in improving the way we deliver code through an engineering pipeline; we’re challenging both conventional systems and the processes we use, including where we’ve used handoffs between engineers and non-engineers.
Across the entire organisation, we’re looking for big pools of value, where we can simply automate away using very engineering-centric techniques, to think of engineering not as a single, discrete task in the pipeline, but as a collection of activities that occur across the entire pipeline. And wherever there’s something that’s done in a repeatable fashion, we’ve got to use machines to do that rather than humans.
FST Media: Before your return to Australia in 2019, you spent a good part of your recent career in North America. Comparing the two, what did this experience teach you about how Australian FSIs innovate, invest in, and leverage their digital resources?
Hogarth: As financial institutions, we demonstrably punch well above our weight in this region – and particularly against North America. We have a degree of ambition in this region that’s significant. Our engineering talent is world-class – which may come as a surprise to some people.
And I don’t just mean the people cutting code right from day one; I’m also talking about senior engineering leaders and thinkers who really want to challenge traditional approaches.
We have a focused market here, meaning that the scale of our banks and the volume we have are real drivers. If you compare it to North America, which is a much more fragmented banking market, we’re at a scale and size where we’re large enough to have really important volume problems. We also have a very rigorous regulatory regime and stringent requirements for our banking sector, which drives a level of rigour that is not necessarily matched everywhere else in the world. But we’ve also got a degree of readiness to experiment and try new things and step outside the box on how we approach certain problems. That’s one of the reasons why many banks overseas often look to Australia and the changes we make.
We’ve probably got one of the most significant pools of innovative talent in the world, and one that I’m immensely proud of.
If I could add one more thing, the way we innovate in Australia and how we invest in innovation, we’re pushing it a lot further. Looking at the banking sector in particular, we were way ahead of the rest of the world when it came to electronic payments at point of sale, with the launch of the EFTPOS network in 1983; we were also as early as any bank in the world adding internet banking in the mid-90s. And in the late 90s, we had the payments industry scheme available for BPAY to enable online payments very quickly and for free. I always found it funny during my stint overseas that everyone would proudly show off – in the second half of 2015! – their ability to transfer money to other people, almost processed in the same day for only a few dollars. To explain that we in Australia have had this capability for a long time, we’ve been able to open accounts quickly, to transfer money seamlessly – it’s an incredible base.
A lot of the engineering we do now is way more than just the basics (which, of course, we still continue to do). The stuff we can now do – because we’ve got a good base payment and banking capability in Australia – has really benefitted this region. You can also see it in the many fintech start-ups we have here. There’s a lot of ambition here because we’ve been able to do so much more with banking than anybody in North America for a long time.
FST Media: And it’s great to hear you mention, despite the evident tech talent shortage across the information industry, of the depth of engineering talent in Australia’s banking sector.
Hogarth: Of course, it’s worth tempering the statement on shortages. Yes, there’s certainly a shortage; there’s an appetite for more. But there’s no shallowness here. We have a great depth of thought here – we just need more of it.
Do we have enough engineers? I don’t think so. But the calibre of people who are deep in the engineering profession inside Australia’s IT industry is exceptional.
We’ve got some of the best thinkers in the world. Ultimately, we just need to broaden our talent pool.
FST Media: We touched on cloud a little earlier. How would you rate the progress of ANZ’s wholesale cloud transformation program? What gains or innovation potential have you realised from its adoption so far?
Hogarth: We’re making really good progress. It’s a significant priority and a frequent conversation within the bank.
It’s something we’ve galvanised our technology and business teams around and, from it, we’re starting to see significant tangible outcomes. Some of that is just access to the innovation ecosystem; after all, the more content, the more applications, and the more data we have in cloud, the greater access we have to modern tools. That to me is one of the key benefits of moving to cloud. There are also benefits around time to market in building and deploying capabilities.
We’ve can get projects to market much, much more rapidly and spend less time worrying about boilerplate implementations necessary when you build everything yourself, enabling us to focus on putting our best people on projects that drive the most value for the customer and shareholders.
Examples abound where we’re able to get to market faster and arrive there with less risk.
We’re also seeing benefits around the economics of cloud. When we move to a model that is less capital intensive and more pay-as-you-go, enabling teams to increase or reduce their capacity based on the economic benefits of the program, your innovation quotient really improves. You can decide to try many things and then quickly squash them without having to de-provision – doing away with the fallacy of ‘I’ve already paid for the capital, so I may as well keep the application alive’. This enables us to take far more small bets and to try them at a smaller scale, and if they work, to expand them. If successful, we can then quickly and simply expand them; we don’t need another project to resize and create more capacity. This new economic model creates a lot of innovation drivers.
FST Media: As ANZ builds out its data capability, particularly off the back of ANZ Plus, what service innovations do you hope to realise over the next 18 months?
Hogarth: There’s obviously going to be more that you’ll see from ANZ Plus, and many of those things won’t obviously be connected to data, but they’ll be capitalising on some of those data investments we’ve made under the covers.
There’ll be further transformations over the next 18 months as we leverage that shift in data architectures that we started perhaps a decade ago and convert a number of traditional data assets onto modern platforms. Those are difficult discussions, as with all significant investments, because it’s hard to realise the value on day one.
But the shift around how you manage data and the sophistication of those tools is essential not only for businesses to continue to operate competitively but also to ensure they continue to operate responsibly.
The outcomes that you’ll see are going to be hard to visualise instantly – they’ll be behind the scenes. You’ll see them in things like ANZ Plus, but you’ll also start to notice significant improvements in how we manage our internal costs, our internal systems, some of our reporting and other responsibilities we have. Many of those tasks will become simpler and more reliable over time. That’s a key outcome of our data foundations.
FST Media: Gerard Florian last year spoke of a four-year journey to transform ANZ’s tech function into a whole-of-business “service provider”.
What implications has this had for the tech team and what benefits are hoped to be realised for the bank’s wider operations?
Hogarth: It’s about shifting the view from individual IT assets to realising that to offer a service to a customer, there’s going to be a chain of components that need to work together as one. This has changed the way we think about our systems: while we’re always going to have lots of different assets, we take a view that the chain of those assets becomes more important than the individual assets themselves.
In terms of implications for the tech team, when we look at some of our business services, we’re now able to trace all the way through a whole series of components that are cross-divisional lines, view their overall performance, and tie them not to a broad bucket of what we offer to the consumer marketplace but rather individual streams such as ‘payments’. We can actually see, specifically, which types of payments from which sets of customers are going through and, if there’s a flaw or a fault, which sets of systems have which kind of knock-on effects.
While that’s at the operational end, it also changes the way you price things. By managing a set of services-as-a-single-service, you can start to look at the total cost of service across all components, as well as the total risk position, because even if you have a chain of systems and one of them is considered low risk, it’s the chain of systems together that’s important. That’s started to have some ramifications for how we manage groups of systems, because we know that they’re part of an overall chain.
From the planning perspective, we can consolidate different business requests into our common service. It also reduces unnecessary duplication of effort, because you realise that two different business teams are more or less producing the same kind of capabilities. From here, now that we’ve got a really solid base of service operations, we can start to think of services and how they’re designed and used across tech and business in the coming years.
FST Media: Board and wider executive buy-in is of course crucial for the success of any large-scale technology program. How can you best convince those with their fingers over the purse strings to embrace your technology and innovation agenda?
Hogarth: First of all, ANZ’s got a great board that’s emphatically behind the technology vision that we have and has been of course a key component of many of our major transformation initiatives.
With any large-scale technology program, the most important thing to talk about around technology is the value that it provides – both immediately and in the medium to longer terms. We’re in a state of significant industry innovation; sometimes one can get caught up in the hype. At the other end of the spectrum, one can quickly disbelieve the hype and focus only on immediate benefits.
When I’m talking to anybody about a large transformation, I always try to couch it around both the immediate tangible benefits that one can get now, but also around longer-term structural benefits.
Those are often hard to quantify in purely economic terms. It doesn’t mean you shouldn’t attempt to, but it’s about sizing and framing all investments to explain that longer-term opportunity, and sometimes that longer-term risk if you don’t invest. It really has to move beyond the hypothetical and into the tangible.
The good news is there are plenty of examples of financial services companies around the world who’ve made similar bets on similar types of transformation programs. Explaining these and the size of the potential, it’s not a stretch of the imagination if can talk to those specifics. Ultimately, though, if you can frame what you’re doing around how it will help the customer and shareholder, and describe it in a way that shows a methodical, staged implementation, that’s the most important thing.
FST Media: Finally, who are your innovation heroes and how have they inspired your approach as a technology leader and innovator?
Hogarth: There are a few. John Boyd, who was the originator of what some of my friends and I refer to as ‘Boyd’s law’. Boyd was a Colonel in the army who identified that in times of uncertainty, the speed of iteration is more important than the quality of iteration. There are plenty of modern thinkers who’ve studied this problem of how you take large organisations and ensure they’re able to pivot, to change, and to take bold bets, like ANZ Plus.
The innovators in large companies who make bold bets to transform and end up with a fundamental shift in culture I find far more interesting than those who do it on their own in small enterprise start-ups.
Geoffrey Moore is also a wonderful thinker on this piece and talks about it in particularly practical terms.
The biggest lessons I’ve learned have really been from people who’ve deeply thought about the problem and challenged the dogma. That might be a simple statement, but when it comes to transformation, it is so easy to fall into formulaic answers that one often gets from big four consulting firms. Often these problems require a very deep understanding of the business and of the technology, and a willingness to highlight challenges in learned behaviour. It’s those people who’ve got scar tissue from big organisations, who’ve worked out how to transform through taking risks, in challenging the status quo, in ripping up dogma and in approaching problems with a deep, deep intellect – they are the people I really look up to.
Tim Hogarth was a feature keynote speaker at FST’s 2022 Banking Summit.