ANZ is a leader both in Australia and internationally for the development, strategy and delivery of financial inclusion and capability programs, according to a third-party review of the bank.
According to the review by the Allen Consulting Group, ANZ’s financial inclusion strategy is both sound and represents first-mover advantage in community investment, and that the best practice aspects of the Bank’s programs means that ANZ could generate considerable societal and reputational value if they apply those same programs in offshore markets. ANZ commissioned the Allen Consulting Group to perform the review.
The review looked at the bank’s strategy and reviewed four programs – MoneyMinded, Money Business, Saver Plus and Progress Loans and determined that the first three have performed well against the bank’s strategy and the agreed objectives, but that Progress Loans have a more mixed results.
“The challenge to strategy as ANZ deliberates on the future of its community investment in financial inclusion and capability, is whether the existing quantitative impact (the number of disadvantaged people able to have access to programs and benefit from them) is adequate; or if seeking more scale in programs such as MoneyMinded and Saver Plus in particular, should be a strategic objective in the future,” the Allen Consulting Group said in its report.
According to the review, in 2003, ANZ set three objectives around financial inclusion and capability – “update its research into financial literacy every two years; integrate findings and insights from research into its business operations; and invest in community partnerships to deliver adult learning programs to those people most in need, and able to benefit.” The report determines that ANZ delivers well on the first and third objectives, but needs to integrate insights from community investment in financial inclusion into business operations, including better engaging with employees.
“The strong view of external stakeholders, and most ANZ employees and senior executives participating in this review, is that ANZ’s community investment in financial inclusion and capability is aligned with its core strategy and ‘makes sense’,” the report said. “External stakeholders perceive more strongly that this is the case than some internal stakeholders, especially employees. Best practice corporate community investments and their related programs are most sustainable when the strategy underpinning them, and their progress, are well understood. Sentiment from the employee focus groups conducted for this review highlights there is substantial opportunity to further engage and involve employees in ANZ’s existing and future efforts.”
The review concluded that there is potential and stakeholder support to expand the bank’s MoneyMinded program. The program has reached more than 125,000 people since its 2005 inception, with 30,000 participants in the last year. Evaluations of MoneyMinded show that participants report an increase in skills, knowledge and confidence around financial literacy. There is scope for expansion of MoneyMinded, through negotiations with existing partners, building new coalitions to deliver the service.
Similarly, the bank’s MoneyBusiness program was well regarded by stakeholders. In 2010, MoneyBusiness was brought to 167 communities in Western Australia, the Northern Territory and Queensland, and more than 3,000 Indigenous people have participated. The review said the program’s flexibility is a source of strength in allowing it to be modified based on the experience of participants and trainers. The review said more research is needed to inform the program’s further development and to put it on par with the bank’s other programs.
There is also support to expand the bank’s Saver Plus program, which has involved more than 13,000 participants in matched savings and financial literacy. The Saver Plus program is delivered with the Brotherhood of St Laurence since 2002 on the Saver Plus program. Research has indicated that 87% of Saver Plus participants continue to save at the same rate or more, three years after completing the program.
“There is considerable stakeholder support for ANZ, if it deems it desirable, to expand Saver Plus so it can reach more people in Australia who are eligible to participate,” the report noted. “Scaling up the reach and impact of Saver Plus could in part be financed via supplementary funding models. This could include matched workplace giving from ANZ employees, and investigating securing funding from individual Australians and philanthropic foundations. Such investigation would necessitate examination of governance and legal structures, as well as taxation issues.”
However, the review critiqued the Progress Loans program, which provides people on low-income with access to loans of between AU$500 – AU$3,000 to pay for household items. The review notes that since its introduction in conjunction with the Brotherhood of St Laurence in 2006, 1,409 loans have been approved to 1,259 customers with an average default rate of 2%. But changes to the banking environment in the past six years mean that there is wider availability of finance to people with low incomes, including Centrelink advance and other programs operated by other finance providers like the National Australia Bank means that there are lower cost options than Progress Loans.
“Unlike MoneyMinded, MoneyBusiness and Saver Plus, there is no strong rationale to expand or extend Progress Loans, which independent research has concluded has achieved mixed results in building the financial capability of loan recipients (though notes also that the loans themselves have been life-changing for many participants),” the report said. “We advise that ANZ can best strengthen financial inclusion and capability in Australia via its corporate community investment by focusing on the saving, educative and innovative delivery sphere, rather than on the lending sphere.”
Looking to the future, the Allen Consulting Group suggested that there is considerable scope for ANZ to expand its programs and include new cohorts such as aging Australians and some tertiary students. The report recommended the bank consider expanding MoneyMinded, MoneyBusiness and Saver Plus, but withdrawing from Progress Loans.
ANZ Bank agreed with this conclusion in a statement responding to the report.
“A decision has therefore been made to focus on increasing the scale and reach of programs that build money management skills and savings,” the bank said. “The small scale Progress Loans program will be wound down over time. To help expand our financial education and savings programs, working with our community partner organisations, we will pilot the use of mobile and/or online channels to deliver MoneyMinded. We will also aim to increase program access for groups that could benefit most, including blue collar workers, tertiary students from disadvantaged backgrounds, mature aged Australians (particularly women living alone) and immigrants. In the next five years we aim to reach a further 200,000 people with MoneyMinded.”