The Pacific’s digital answer

The disparate nature of the Pacific means people living on smaller outer islands or in remote areas away from cities often rely on cash - and do not have bank accounts. Even if they do have an account, they may still rely on alternative financial services such as money orders, money transfer organisations, cheque cashing services and payday loans.

"Delivering the right outcomes for customers while running an efficient and profitable business in the Pacific means we need to overcome these geographic challenges for our customers.”

The data are patchy but a 2016 study by the Pacific Financial Inclusion Programme (PFIP) found that while a large proportion of Fijian and Samoan savers have bank accounts, in the Solomon Islands the percentage reduces to only 26 per cent of adults. Women fare worse.

Now the situation is improving – we understand in Fiji, for example, the total banked population has reached more than 80 per cent compared with 64 per cent in 2015. The rest of the Pacific is improving too, particularly compared with the broader challenge in the emerging world. But there is still much which needs to be done.

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There are significant international efforts underway, including by the PFIP, to change this. ANZ builds partnerships with not only PFIP but also governments, regulators and international organisations. These include the United Nations Development Programme, the United Nations Fund for International Partnerships and the Reserve Bank of Fiji. Our aim is to introduce digital banking and combine this with MoneyMinded – our flagship, highly regarded financial education program for adults.

But the end result of the ‘under-banking’ and under-developed banking in the PICs is higher costs, poor customer experience and inadequate service for Pacific people. In my view, that is unacceptable and at ANZ we’re doing something about it.

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With a presence in 12 countries in the Pacific, serving customers across hundreds of islands, ANZ faces a challenge in serving our customers. Traditional bricks and mortar banking services don’t meet the needs of many in remote areas and outer islands.

Delivering the right outcomes for customers while running an efficient and profitable business in the Pacific means we need to overcome these geographic challenges for our customers.

I truly believe the answer is digital.

Digital banking lowers the cost of services for individuals, lowers transaction costs for businesses and promotes financial inclusion. It effectively breaks down barriers to access and gives Pacific people a global platform to compete on the international stage.

While access is uneven across countries, better internet in the Pacific means technology is rapidly changing the status quo, much like it has elsewhere. More people own mobile phones and have more reliable internet connections, even in some extremely remote locations.

There are still challenges of reliability and cost but these will improve over time with more infrastructure investment.

What we’re seeing at ANZ is that people in the Pacific can see the potential and are already extremely connected online.

In 2020 for example, we saw a 124 per cent increase in the number of active customers using our ANZ Pacific banking app. That’s coming off a low base but interestingly, we’ve seen a huge catalyst in the Pacific in the last 12 months off the back of the COVID-19 pandemic.

In the past 12 months, we have moved from:

• 26 to 35 per cent of Pacific customers on internet banking;
• 12 to 23 per cent of Pacific customers on our ANZ Pacific app;
• 17 to 23 per cent of Pacific business customers using our Transactive app for business.

One key part of Pacific economies is remittances – the money sent back home by the Pacific diaspora living abroad.

Remittances account for around 15-25 per cent of Pacific household incomes and in the past year they have become even more important. Total remittances to Fiji in 2020 was FJD653 million (6.9 per cent of GDP), Samoa was WST603 million (29 per cent of GDP) and Tonga was TOP425 million (37 per cent of GDP). All were a historical record.

But we know that traditionally, the cost of sending money home to the Pacific is among the highest in the world.

It’s yet another barrier to the financial wellbeing of Pacific people.

So ANZ has prioritised digitising International Money Transfers (IMTs) to the Pacific to bring down costs and breakdown these barriers. Since 2019, we have offered IMTs via our ANZ Pacific app and internet banking platforms. We face a challenge to get the word out but this provides a cheap and secure option for those wanting to send money home.

And in a year like no other, ANZ made the decision to waive fees for online money transfers from Australia and New Zealand for six months from September 2020. We recently extended this fee waiver out to September 2021.

What we saw was phenomenal.

Pacific people really took advantage of the fee waiver, rallying to support friends and family at home. We’ve seen a huge jump in both the volume and the total amount of money being sent back to the Pacific.

In February 2021, we saw:

• A 71 per cent increase in volume of transfers from Australia and a 127 per cent increase from New Zealand (based on the prior comparable period).
• A 27 per cent increase in the amount of money being sent from Australia and a 47 per cent increase from New Zealand (based on the prior comparable period).

The results demonstrate Pasifika culture at its best; that we are stronger together and we will rally to support each other in tough economic times.

But with vaccines on the horizon, the conversation must now shift to the rebound.

For the financial services industry that means not just helping our customers survive but rather to thrive off the back of the rebound. On digital, the challenge we face now in the Pacific is one of infrastructure, continuous improvement, information, education and word of mouth.

Tessa Price is Pacific Regional Executive at ANZ