Marketing Audit For ANZ Bank: Analyzing Growth And Profitability In The Banking Industry

ANZ Bank – Company Overview

Marketing management is a process of planning, developing, organising and executing marketing strategies for products or services to reach desired customers segment (Kotler, 2015). This report will conduct a marketing audit for ANZ Bank which is Australia’s third largest bank in terms of market capitalisation, and it is the largest bank in New Zealand. The corporation was founded in 1835, and it operates in banking and financial service industry. The headquarters of the firm is situated in 833, Collins Street, Melbourne, Australia (ANZ, 2018a). The firm is included in ‘big four’ banks in Australia which include Commonwealth Bank (CBA), Westpac Bank, National Australia Bank (NAB) and ANZ Bank (Owler, 2018). The products of the firm include bank deposits, home loans, insurance, credit/debit cards, business accounts, and others. Customers of the firm include both individuals and corporations that open saving and business accounts respectively. The corporation has an extensive interest in home loans as well, and it offers competitive interest rates in order to attract more customers. This report will analyse ‘Richmond’ as a potential market for home loans of the company. Richmond is an inner suburb situated in Melbourne, Australia and it has a population of 32,848 as per 2016 census (Urban Melbourne, 2016). This report will evaluate growth and profitability in the banking industry and analyse the primary and secondary target market for ANZ Bank. Further, a positioning map of ANZ will be provided in the report to analyse its position in the market.

ANZ Bank offers its services across the world, and it operates in banking and financial services industry. The industry is affected by a number of market trends which both positively and negatively affects its operations. 

Growth and Profitability

The banking industry has reported a substantial growth due to the stable economic environment that creating new business opportunities for banking organisations. The service industry dominates the economy of the country with over 65 percent being service companies in the country (Salama, 2015) (Figure 1). According to the Reserve Bank of Australia, 147 authorised deposit-taking institutions are operating in Australia which covers the largest part of banking and financial sector (Royal Commission, 2018) (Figure 2). The RBA held the interest rates for housing loans at 1.5 percent which is beneficial for the banking companies since it increases their customers (White, 2018). The ‘big four’ banks in Australia have dominated the banking industry with Commonwealth Bank being the largest in terms of revenue. The major banks hold 36.7 percent of the banking sector in Australia (Royal Commission, 2018) (Figure 3).

Market Overview

Commonwealth Bank reported a cash profit after tax of $9,881 million whereas ANZ reported a profit of $6,938 million (KPMG, 2017) (Figure 4). The Reserve Bank of Australia has not changed interest rates on home loans which creates growth opportunities for ANZ because it increases the number of people taking home loans. Melbourne is one of the most profitable areas for ANZ because it is densely populated and many people take home loans to purchase house nearby. The banking industry generated revenue of $31.5 billion in 2017 and ANZ is Australia’s third largest bank in terms of market capitalisation (KPMG, 2017). ANZ has reported a growth of $700 million in terms of profits which has risen from $5.7 billion to $6.4 billion from 2016 to 2017 (Mascio, 2017). A large portion of firm’s profits is generated from its branches in Melbourne and from people who take home loans.

Figure 1: Australian GDP Allocation in Sectors

(Source: Salama, 2015)

Figure 2: Assets of financial institutions, September quarter 2017

(Source: Royal Commission, 2018)

Figure 3: Composition of different types of banks by number of entities

(Source: Royal Commission, 2018)

Figure 4: Cash profit tax by segment

(Source: KPMG, 2017)

Macro Environment (PESTLE Analysis)

According to Gupta (2013), the PESTLE analysis is a framework which is used in order to evaluate different external forces that affect a company’s operations and profitability. The PESTLE is an acronym for political, economic, social, technological, legal and environmental factors.

Political

The political environment in Australia is stable which is beneficial for ANZ Bank’s operation. Changes in legislation due to changing political environment also negatively affect the corporation’s operations. For example, the big four banks have to pay a bank levy rate of $6.2 billion which is imposed by Treasurer Scott Morrison (Morgan, 2017). ANZ offers its services globally, and radical changes in the international political environment have a negative impact on corporation’s growth. For example, the trade restriction imposed by the Trump administration can negatively affect the company’s profitability (Ensign & Tracy, 2018).

Economic

The foreign currency exchange rate is stable in Australia due to the steady economic environment which is beneficial for ANZ. The GDP of the country grew 2.4 percent in 2017; however, the rate has reduced from the annualised rate of 2.8 percent (Letts, 2018). The service sector contributes the largest portion of nation’s GDP, and these corporations contribute over 65 percent to the country’s GDP (Salama, 2015). The stable and low-interest rates maintained by the Reserve Bank of Australia of home loans assist ANZ in attracting more customers. Due to high population density, Richmond, Melbourne is a prime location for ANZ Bank, and many potential customers get home loans for purchasing a house in nearby areas. 

PESTLE Analysis of ANZ Bank

Social

The firm is focused towards fulfilling their customers’ requirement in order to improve their banking experience. Around two third or 66 percent of Australian population belongs to working age group, and they take home loans to purchase houses near major cities (Australian Bureau of Statistics, 2016). In Richmond, Melbourne, most people are mid-aged, around 33 years, and they purchase their first house by taking home loans (Urban Melbourne, 2016). The corporation has implemented an effective corporate social responsibility model for ensuring sustainable development of its stakeholders which allow it to maintain a positive brand image.

Technological

ANZ Bank understands the importance of the latest technologies advancements, and the company incorporates them into their operations for improving efficiency and overall customer experience. The corporation uses technologies to create an ‘agile’ environment which assists them in effectively managing different branches and security the data of their customers (Pearce, 2017). The company also offers the latest technologies to its customers such as open credit card facility and payment through NFC such as Apple Pay which allows its customers to use its banking services effectively. ANZ also offers banking services to its customers directly through its mobile applications which enable them to manage their bank accounts and make or receive payments from another account.

Legal

The corporation complies with different regulations of Banking Act 1959 in order to ensure that it effectively manage and secure the data of its account holders. Furthermore, different taxation, employment and local regulations are required to comply by the enterprise. While operating in Melbourne, it has to comply with different local laws implemented by the government. Moreover, it has to obtain an Australian Financial Services Licence in order to provide financial services to its clients (ANZ, 2018b). New changes in banking regulations affect the business of ANZ Bank since it has to comply with its requirements.

Environmental

The requirement of environment-friendly business policies is growing between modern organisations, and they focus on implementing effective policies for reducing their carbon emissions. ANZ Bank invests in wind power in order to use renewable energy sources for performing its operations. In over next five years, the company has committed to invest more than $10 billion in renewable energy sources for reinforcing the transition in order to reduce carbon emissions (ANZ, 2018c). The firm issues an environmental sustainability report which includes a number of initiatives taken by the enterprise for sustaining and protecting environmental resources.

ANZ Bank’s Primary and Secondary Target Market

ANZ Bank is competing against other large banking firms in Australia including Westpac, Commonwealth, Bank of Queensland NAB, and AMP limited. These companies are market leaders in Australian banking sector. The market followers include Bankwest, Suncorp Bank, AMP Bank Ltd and Bendigo Bank. Currently, ANZ is third largest bank in Australia in terms of market capitalisation, and its main competitor is Commonwealth Bank which is the largest banking corporation in Australia in terms of market capitalisation.

Major market segments

The major market segments of ANZ include people who open savings accounts and take loans and other businesses that use ANZ’s services for performing different banking practices. Large organisations also hire ANZ bank as their main bank for performing activities such as issuing of shares, liquidation, taking loans and others.

Primary and secondary target market

The primary market segments of ANZ include individuals who open savings bank accounts and take home loans. The company use its mobile application to offer direct B2C service to its account holders. Customers can perform different banking activities and apply for home loans directly from the mobile application of ANZ. The company generate most profits from individual deposits and loans. Small and medium businesses that open a current account in ANZ are also a primary target segment for the company. Richmond, Melbourne is a densely populated area, and a large number of people purchase home loans to buy houses nearby (Urban Melbourne, 2016). The median age of people in Richmond is 33 years, and most of them take home loans to purchase their first house. It is a potential home loans market for ANZ because people fully own only 19.6 percent homes and 23.6 percent are in the process of home loan mortgage and other 53.8 percent are rented (Local Stats, 2018). The company can offer competitive interest rates on home loans that will attract a large number of people. The secondary target market for the firm includes large organisations that hire ANZ for performing different banking activities such as liquidation, issuing of shares, taking loans and others. These corporations are the secondary target market for the enterprise because in Richmond, Melbourne only a limited number of organisations operates. On the other hand, these companies did not change their current banking firms which make them a secondary target market for ANZ Bank.

ANZ Bank has high level of involvement, and it highly influences the decision-making process of the company. The Corporation monitors its primary and secondary target market segments and incorporates policies according to their requirements. 

Positioning Map of ANZ Bank

Adaptation of B2C Model

In order to improve its customer engagement and overall banking experience, the firm has adopted a B2C model. In this model, the company allows its customers to interact with the company directly and avail their services. Account holders can access their information through the mobile application of ANZ Bank and the company also provide online banking and net banking services to its customers (Cameron, 2017). The firm also collects feedback from customers in order to improve their products and services. Customers can apply for home loans, make payments, receive payments and take other banking actions directly from the mobile application.

Developing new products/services

ANZ Bank closely monitors its customers’ requirements and introduces products and services to fulfil their demands. While entering into new markets, the company analyse its customers and their requirements. In Richmond, Melbourne, a large number of customers are mid-aged who but new house after taking home loans. The corporation can take advantage of its low-interest rates on home loans to attract new customers and increase its market share.

Pricing Strategy Analysis

The company offers competitive interest rates on its home loan schemes which attract more customers. The corporation offers 0.5 percent p.a. variable rate discount and 0.15 percent p.a. fixed rate discount to its customers for total mortgage lending of $150,000 to $249,000 (ANZ, 2018d). The firm carefully modifies its pricing strategy in order to meet the requirements of customers. It shows that the company is highly involved and it has a substantial impact on its decision-making process.

Figure 5: Perceptual Map

Positioning Statement

The positioning map of ANZ Bank shows that the firm is one of the major players in the banking sector. The major market players in the banking industry of Australia include Commonwealth Bank, Westpac, Bank of Queensland and National Australia Bank (NAB). Commonwealth Banks is leading the Australian banking sector by offering high-quality services at relatively lower prices. ANZ Bank offers services low-interest rates to its customer and quality banking experience by implementing modern technologies into their system. In comparison with Westpac and Bank of Queensland, ANZ Bank generates lower profits; however, its market capitalisation is larger than these organisations. In Richmond, Melbourne, a large number of customers belong to low to mid-income group, and they prefer to take home loans at lower interest rates. ANZ Bank can offer them relatively lower interest rates on home loans and provide quality banking experience at the same time. The company can market its products by using its positive brand image and comparatively lower interest rates. The services offered by the enterprise assist them in maintaining a competitive advantage over its competitors, and they can assist the firm in expanding its business in Richmond, Melbourne. 

Strengths and Weaknesses of ANZ Bank and its Main Competitor Commonwealth Bank

Conclusion

From the above observation, it can be concluded that ANZ Bank is one of the leading banking organisations in Australia and it is the part of ‘big four’ banks in Australia. The primary competitors of the enterprise include Commonwealth Bank, Westpac, and National Australia Bank. The company offers low-interest rates on home loans to its customers which assist in increasing its customer base. There are different political, economic, social, technological, legal and environmental factors mentioned in the report which influence the business of ANZ Bank. The corporation is highly involved in the decision-making process regarding its customer base. The primary target segment of ANZ Bank includes customers from low to mid-income groups who prefer to take low interest rate home loans. Small businesses and organisations are also included in primary target segment of ANZ Bank, and secondary target segment includes large corporations. In Richmond, Melbourne, the company can expand its operations by marketing its effective customer service experience and lower interest rates on home loans. It can increase ANZ Bank market capitalisation and expand its customer base. 

References

ANZ. (2018a). About ANZ. Retrieved from https://shareholder.anz.com/our-company/profile?_ga=2.81866198.1361196615.1523424179-2089623680.1523104002

ANZ. (2018b). Rules and Regulations for Accounts. Retrieved from https://www.anz.com/documents/au/aboutanz/118468_chinarulesreg_58455_v3.pdf

ANZ. (2018c). $10 billion to support the transition to a low carbon economy. Retrieved from https://www.anz.com/about-us/corporate-sustainability/ad/

ANZ. (2018d). ANZ Breakfast home loan package. Retrieved from https://www.anz.com/auxiliary/rates-fees-terms/interest-rates/

Australian Bureau of Statistics. (2016). Population by Age and Sex, Regions of Australia, 2015. Retrieved from https://www.abs.gov.au/ausstats/[email protected]/Previousproducts/3235.0Main%20Features102015?opendocument&tabname=Summary&prodno=3235.0&issue=2015&num=&view

Cameron, N. (2017). Scott-Branagan leaves Deakin CMO post for role at ANZ. Retrieved from https://www.cmo.com.au/article/630232/scott-branagan-leaves-deakin-cmo-post-role-anz/

Commbank. (2018). International branches. Retrieved from https://www.commbank.com.au/about-us/our-company/international-branches.html

Ensign, R.L. & Tracy, R. (2018). Trump Administration Seeks to Change Rules on Bank Lending to the Poor. Retrieved from https://www.wsj.com/articles/trump-administration-seeks-to-change-rules-on-bank-lending-to-the-poor-1515624418

Gupta, A. (2013). Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.

Kotler, P. (2015). Framework for marketing management. New Delhi: Pearson Education India.

KPMG. (2017). Major Australian Banks. Retrieved from https://home.kpmg.com/content/dam/kpmg/au/pdf/2017/major-australian-banks-full-year-2017-results-analysis.pdf

Letts, S. (2018). Australia’s economy grew by 2.4 per cent in 2017, below expectations. Retrieved from https://www.abc.net.au/news/2018-03-07/gdp-q4-2017/9522450

Local Stats. (2018). Richmond Demographics (VIC) Local Stats. Retrieved from https://richmond.localstats.com.au/demographics/vic/melbourne/south-east/richmond

Mascio, C. (2017). ANZ Bank earnings up 21 per cent. Retrieved from https://www.graffiotech.com/2017/10/26/anz-bank-earnings-up-21-per-cent/

Morgan, E. (2017). Federal budget 2017: Scott Morrison’s new bank levy likely to hit hip pockets, financial sector says. Retrieved from https://www.abc.net.au/news/story-streams/federal-budget-2017/2017-05-10/federal-budget-2017-bank-levy-to-hit-hip-pockets/8512258

Owler. (2018). ANZ Competitors, Revenue, Number of Employees, Funding and Acquisitions. Retrieved from https://www.owler.com/company/anz

Pearce, R. (2017). ANZ pushes forward with agile transformation. Retrieved from https://www.computerworld.com.au/article/626021/anz-pushes-forward-agile-transformation/

Royal Commission. (2018). Some Features of the Australian Banking Industry. Retrieved from https://financialservices.royalcommission.gov.au/publications/Documents/some-features-of-the-australian-banking-industry-background-paper-1.pdf

Salama, A. (2015). Will Reserve Bank of Australia cut its Interest Rate tonight?. Retrieved from https://www.fxstreet.com/analysis/daily-technical-analysis-and-forecasts/2015/08/31/02

The Australian. (2017). Class action filed against Commonwealth Bank over ATM scandal. Retrieved from https://www.theaustralian.com.au/business/financial-services/class-action-filed-against-commonwealth-bank-over-atm-scandal/news-story/efbcfaddba7498b670926f3597cc9bd6

Urban Melbourne. (2016). Census 2016: The 20 Most Densely Populated Areas of Melbourne. Retrieved from https://urban.melbourne/planning/2017/08/01/census-2016-20-most-densely-populated-areas-melbourne

White, E. (2018). Reserve Bank of Australia holds interest rates at 1.5%. Retrieved from https://www.ft.com/content/8f5c390c-0ae9-11e8-8eb7-42f857ea9f09 

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