ANZ’s banking services business domain lead talks to Joy Macknight about how open banking will foster digital transformation, and where blockchain technology and cryptocurrencies fit in.

Nigel Dobson

In May 2018, the Australian government instructed the country’s major banks to begin a phased implementation of open banking, beginning with making credit and debit card, deposit and transaction account data available from July 2019. The legislation, expected to be passed in early 2019, will drive the adoption of open banking through application programming interfaces (APIs) across the financial services industry.

But there is much more to open banking than a set of APIs, says Nigel Dobson, banking services business domain lead at ANZ. He believes that it will herald the next stage of banking’s evolution. “We are excited because open banking dovetails with our vision that a digital bank of the future is an open bank,” he says.

In Mr Dobson’s opinion, a future digital bank will need a deep understanding of its services platform and the ability to deliver those services. In addition, it must be able to process immense amounts of data, whether from financial institutions or other service providers.

Career history: Nigel Dobson  

  • 2017 ANZ, banking services business domain lead
  • 2016 ANZ, general manager, transformation projects 
  • 2013 ANZ, general manager, group payments management, GTSO
  • 2012 ANZ, global head of transaction banking product (cash and trade)
  • 2009 ANZ, global head of payments and cash management

“Data consumption will be very valuable and ANZ’s ability to exercise that muscle will be important for our digital fitness going forward,” says Mr Dobson. The bank is currently building capabilities to expose and consume a vast array of data, as well as working with several companies to improve data quality in preparation for open banking.

Mr Dobson brackets open banking with an ecosystem view of the future. “A digital bank will need to have the ability to test, build and co-create propositions using open banking data, as well as additional and enhanced data,” he says. “It is our ambition to be one of the leading open banks in Australia with an ability to work with – and enrich – our partners’ capabilities.”

Blockchain’s potential

In addition to open banking, ANZ has been exploring how new technologies, such as distributed ledger technology (DLT), can help solve substantial client and industry issues. For example, in 2016 the bank partnered with Wells Fargo on a proof of concept using DLT to reconcile Swift messages. A year later, ANZ and Westpac teamed up on using DLT to do bank guarantees – a traditionally paper-heavy process – for commercial property leasing. “Our thinking was that not only is this a fantastic mechanism for sharing information, but it is also a great driver for digitising documents,” says Mr Dobson.

ANZ is currently in pre-production development with four other Australian banks, IBM and property company Scentre Group, with plans to launch a commercial entity in 2019. “We are well beyond the experimentation stage and into an industry-driven commercialised proposition,” says Mr Dobson.

DLT is also proving useful in the trade finance space. ANZ is one of seven banks participating in the Hong Kong trade finance blockchain platform. In addition to the market’s importance, ANZ values the support shown by the Hong Kong Monetary Authority. As Mr Dobson says: “It is an endorsement not only of the technology but also a broad digitisation strategy within the trade finance world, which is overdue.”

While many banks have been reluctant to engage with cryptocurrencies, ANZ believes that they have important attributes for clearing and settlement in multi-bank and multi-currency environments. “Cryptocurrencies have conquered the asynchronous nature of cross-border settlement in correspondent networks, which adds latency – in days – between a clearing and settlement outcome,” says Mr Dobson. “They can be used to quickly transfer value from wallet to wallet, effectively synchronising clearing and settlement.

“If you couple that attribute with getting rid of traditional cryptocurrencies’ volatility and improving transparency, then you come up with a hybrid stablecoin, which has full transparency and regulatory approval, and exhibits the cryptocurrency’s ability to transfer value rapidly.” ANZ is in talks with several banks to explore how that might work.

Real-time payments

Australia’s New Payments Platform went live earlier in 2018. “Changing from an end-of-day or batch environment to real-time, 24/365 never-go-down architecture is quite profound,” says Mr Dobson. “All participating banks had to orchestrate a complete renovation of their payments stack, from user interface through to accounting system.”

ANZ held off on offering new capabilities until the second half of the year. “In February, we were unsure of the service quality, not just from our perspective but for the whole industry. We decided not to subject our customers to confusion and a less-than-complete solution,” says Mr Dobson. The bank has now completed the rollout to its customer segments and launched PayID, an addressing service, which will enable features including real-time fraud monitoring.

The bank is also exploring new feature functionality for its payment propositions, such as enabling notifications for specific payments or changing credit lines for large payments such as a weekend car purchase. “We are listening to our customer needs and understanding what their lives and businesses demand,” says Mr Dobson. “We want to use the new rails to create solutions that meet the needs of specific customer events.”

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