ANZ reveals deep business frustration with flaky digital promises

Retail bank ANZ has lent weight to official warnings that Australian businesses are polarising into digital-haves and have-nots after it released research estimating that “56 percent of micro, small and medium businesses (SMEs) did not value digital tools”.

In a report that canvassed more than 1000 Australian businesses, frustrations with the high cost of technology solutions coupled with doubtful returns on investment have emerged as the major stumbling block at the smaller end of town.

The study is a sharp wake-up call to the stereotype that smaller businesses are nimble and swift adopters of technologies like digital payments and cloud applications. Rather, it shows that many applications still just don’t cut it for business needs.

“I’ve given up. I’ve gone back to spreadsheets. The accounting systems out there just don’t meet my business needs,” an unnamed manufacturing business cited in the report said.

“I’ve tried several, they just aren’t flexible enough and I can’t customise them to my business. I need full control over the products and pricing in my accounting system and I can’t find a software tool that will easily allow me to do this.”

Integrations going off the rails thanks to management and sales being swept-up by change imperatives also came in for a thumping.

“We implemented a new ordering and sales platform eight months ago, at an investment of over $100k. There was no formal strategy in place to do this, it was more just a discussion among the executive team that it sounded like a good plan, that it was needed,” a medium-sized retail business lamented.

“We had multiple teething issues getting it off the ground and the costs blew out because we had to get a consultant in to rectify some of the issues. We needed this sales tool, but we don’t know if we’ll ever see a return on investment on it given the implementation costs were so much higher than expected and we hadn’t really planned properly.”

The research compiled for ANZ’s Small Business Banking and Business Banking divisions challenges a popular perception that smaller and mid-size innovators are directly taking the fight up to established incumbent large businesses like supermarkets, big retailers and major manufacturers.

While the document is clearly written as a frank self-help guide for businesses looking at where to start tech and digital overhauls of their operations, it comes as concerns mount that the economic benefits of digital transformation are not being spread evenly across the economy and labour force.

Banks, and especially ANZ have a vested interest in making sure small businesses continue to grow because they traditionally represent a lucrative stream of credit, loans and payment services revenue for major institutions.

Put simply, banks like ANZ need to start helping businesses out in a practical and hands-on way rather than merely dishing out digital rhetoric and hoping things will change.  

The move to talk truth to business problems comes as most banks prepare top switch on functionality for the New Payments Platform that will provide richer, real-time transactions.

ANZ has not been afraid to break from the big four on the tech front either, controversially jumping onto Apple Pay while other banks have held out.

Financial institutions are also under increasing regulatory pressure to clean up their act on around online scams and fraud, especially the degree to which they pass back losses to merchants.

Smaller businesses and their industry groups are on the front line of that pushback because they naturally have a lesser degree of negotiating power with banks because of their size.

Cyber is listed as a key area of attention in the ANZ report with scam victims even outing themselves.

The report cites the experiences of Corey Scott, managing director of Brisbane-based tool and construction equipment provider TEN Group whose bank alerted him to a suspect supplier payment.

“The scam involved an email request from one of TEN Group’s regular suppliers to change their bank details for future payments,” the report said.

“Even though the TEN Group payment was quickly identified as fraudulent, it took some time for the transaction to be reversed, pending the investigation between the two banks involved. In one way, TEN Group was lucky: many businesses never see their money again.

“Although the fraudulent transaction was eventually reversed, it created delays in customer orders, which our team spent a lot of time managing,” Scott is quoted saying in the report.