This is a $4bn really bad idea at any time

ANZ’s plan to buy MYOB is a bad idea for the banking industry and a very bad idea for ANZ specifically. Wayne Byers, the head of the banking regulator APRA, must nip the idea very promptly – and publicly – in the bud.

That’s if he can find the time to tear himself away from devising plans and imposing additional costs on banks – read: bank customers – to secure them from the ravages of climate change in 2100.

The ANZ move is also effectively an announcement that it’s time for ANZ CEO Shayne Elliott – the longest seat-warmer among the big four bank CEOs – to move on.

The ANZ has been a chronic under-performer in two rather important business segments – consumer banking and business banking.

Segments, I say? Actually, pretty much the entirety of the business of banks.

Whupped in the first by the CBA; although to be fair everyone gets whupped by CBA in consumer banking; and whupped in the second by both CBA and NAB.

In very basic terms, by trying to spend an estimated $4bn to buy MYOB, Elliott is effectively announcing he’s given up competing and winning – or rather, not losing too badly – in the, well, banking business.

Oh sure, the purchase of MYOB has been spun through the media as delivering a seminal leapfrog ahead of everyone else across a number of key interfaces with customers and potential customers.

Supposedly, it would make ANZ a better, slicker bank.

Which if true, begs a rather big – rather pertinent and even impertinent – question: why didn’t ANZ do it, say, three years ago? Is that another admission of dozing on the job?

What is MYOB? It can broadly be described as an accounting software group. More specifically it operates like a platform on which data can be stored and accessed, imported and exported. I’ve personally just accessed a MYOB account to process financial returns.

The ANZ sales pitch, and I quote from a media report: “would allow ANZ to get its hands on an ecosystem (or platform) that spans not just accounting, but also payroll, quotes and invoicing, and more than 300 apps from third parties, covering everything from ecommerce to customer relationship management”.

This would supposedly enable the ANZ to tap a lot of data. It would also, and I quote again, give ANZ a “big, fat database of potential customers”. Hmm. That sort of rings an alarm bell. I’m not sure that non-ANZ customers would be too thrilled at becoming a “big fat, ANZ, database”.

There are many problems with the idea.

Let me highlight the main ones – for the ANZ as an individual bank, for the banking industry more broadly.

The all-encompassing one is that banks should stick to their knitting. Their job is to take deposits and make loans and provide associated banking services around that.

It’s not only their ‘job’, it’s why they get special treatment from the taxpayer. I’ll name just two.

The first is the $250k government guarantee for bank depositors, under the broader umbrella of being able to operate at very high – and quite simply, risky – gearing ratios.

The $188bn they got lent by the RBA at 0.1 per cent; on which they will collectively make over $15bn of gross profit over the three years they have the money.

Furthermore, the last ‘big idea’ they all had to build more interfaces with bank customers didn’t turn out that great: so-called wealth management. A Royal Commission and some tens of billions of dollars later…….?

It is a very silly idea to not simply get into bed with one software provider, but to actually own it.

What next, will the ANZ start building the hardware? Buying its own telco? Indeed, its own broadband network?