Banking on Asian diversity

Asia is not a monolithic business destination - so neither should be the approach of an Australian business wanting to engage with the region.

“What differentiates ANZ from our domestic peers is our international network which has evolved as Asia has over more than 180 years.” - Shayne Elliott

Understanding the nuances and responsibility of connecting Australia and New Zealand to Asia involves having the feet of senior people on the ground. They need to be talking to important decision makers.

That’s true for ANZ. After COVID, a need to reacquaint ourselves with the possibilities of the region, with feet on the ground, was imperative.

So this month we held the first overseas executive committee meeting since the outbreak of the pandemic. It was held in Japan, a country where ANZ’s presence stretches back half a century. We have ongoing Japanese customer relationships now in their seventh decade.

But more broadly across Asia we have a busy schedule in keeping with our belief in the growth possibilities for the region.

In a few weeks I will be in Hong Kong for an investor conference and I’m planning two trips this year to India – one next month as part of a delegation and another visit around the middle of the year with our board.

What differentiates ANZ from our domestic peers is our international network which has evolved as Asia has over more than 180 years. All that change continues to bring opportunities for ANZ.”

Japan and the road ahead

Japan is a good example of the quiet power of ANZ’s long term relationships.

The reach of Japanese investment capital into Australia is fascinating and probably goes a little unnoticed because much of it is not branded.

Major Japanese companies – brewers, food producers, financial institutions, insurers – are intertwined with Australia’s economy. In Japan we met with important customers including Toyota, Mitsubishi, Asahi, Inpex, Sumitomo and Mitsui.

Those meetings indicated significant growth opportunities in Japan. This is only strengthened by the increased engagement of the Australian government around both security and political connections.

Two major themes emerged from the customer meetings.

One is sustainability. Every single meeting had sustainability on the agenda. That is very much aligned with ANZ’s values and priorities.

And the second theme is how Japan is rethinking its place in the world. It’s reassessing where there are opportunities and where its friends and partners are.

Japan has to rethink its own future. It's not clear yet how it can produce sufficient energy while facilitating the transition to renewable energy. What is clear is Australia ticks many of the boxes Japan requires as it searches for partners for the future.

This came up in every single conversation, whether it was with manufacturing companies using energy or the financial services sector providing the backing.

 Why Asia matters

ANZ’s international business makes us unique. At the heart of ANZ is trade. We are a trade bank. That's our history which goes back to 1828. That's what we were founded to do. It is in the DNA of the place.

And so we are very good at everything to do with intermediating trade around the region. Our network helps facilitates trade between Australian and New Zealand and the rest of the world.

That's why we're in Japan. That's why we're in China. That's why we're in all of the 18 markets we are in. It’s fair to say we lost our way a little bit over the last 20 or 30 years and forgot what our core capability was.

That’s why a few years ago we took a ‘back to the basics’ approach and asked what that core capability was. That review reminded us we are good at talking to multinationals and facilitating trade. Companies like Toyota, Apple and Audi.

Our international business is now focused completely on these kinds of companies. And ANZ is more successful as a result.

The future is about servicing these customers. It will mostly be about the same customers but crucially we will be doing more with them.

China and diversification

China is Australia's largest trading partner and it is incredibly important to ANZ. Undoubtedly there has been ructions in recent years but our customers have continued to support us and we’ve seen very little change.

Meanwhile one of the silver linings of the recent tensions is it has forced Australian companies to be more thoughtful about diversification. As a trade-oriented bank in Asia we always emphasise the benefits of diversification across the region as a risk management tool.

It’s fair to say five years ago it was very difficult to get anybody to think of anything other than China, as it was such a massive opportunity. It was difficult to get people to think beyond the China market, now that has changed.

People are now more open minded to thinking about markets like Vietnam, India or Japan. Beyond diversification all these markets have intrinsic attractions and in Japan we again saw the value of sophisticated institutions, multi-generational relationships, a very advanced economy and established trade architecture – all of which substantially lowers the risk of doing business despite the maturity of Japan.

It's pretty remarkable really. Even with all the trade challenges, Australia has continued to export and find a home for its products.

And ANZ will continue to play a key role in connecting these companies to the region and facilitating inbound investment into Australia.

Shayne Elliott is CEO of ANZ.