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The two reasons why ANZ is chasing MYOBBuying MYOB would give ANZ access to a small business ecosystem and give it the chance to sell products to SMEs exactly when they need them. Updated Jul 13, 2022 – 2.37pm,first published at 2.07pmSaveShareConfirmation of Street Talk’s revelation that ANZ is in talks with private equity giant KKR to buy accounting software group MYOB, raises an obvious first question: why?Accounting software providers, be it MYOB, Xero or Reckon, typically have arrangements with banks that allow customers to easily import and reconcile data from their bank to their accounting program.Buying MYOB will give ANZ boss Shayne Elliott the chance to sell more business loans. David RoweDoes ANZ really need to buy MYOB for a few billion dollars when it already has such a relationship in place?The answer comes down to the concept of the ecosystem, a buzzword the banking sector has fallen deeply in love with in the past five years.The view inside ANZ is that a partnership with MYOB would only get it so far. Buying the business – and it must be stressed there is no guarantee that a deal actually occurs – 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 e-commerce to customer relationship management.

The breadth of this ecosystem would give ANZ two things.First, it would allow it to tap vast amounts of data on the small- and medium-sized business community. This could be used to shape ANZ’s product development processes, but also its sale and distribution capabilities.Being able to offer a working capital facility or loan to a small business at the moment they need it is an idea that banks have long chased.Indeed, MYOB last year formed a partnership with fintech Valiant Finance – a start-up that has attracted capital from ANZ and the Westpac-backed venture capital firm Reinventure – to offer so-called “predictive financing” from a panel of lenders, including all the big four. ANZ may see itself bringing such an arrangement in-house if its takeover of MYOB is successful.Second, buying MYOB gives ANZ’s a big, fat database of potential customers. While a good chunk of MYOB customers will already be clients of ANZ, the blue bank would dearly love the opportunity to sell products and services across MYOB’s customer universe.ANZ boss Shayne Elliott has spoken often about the challenges banks face in what remains a relatively low interest rate, low growth environment. But with demand for business credit emerging as a real bright spot for the sector in the last 12 months, grabbing MYOB could deliver Elliott a rare growth channel on the commercial side of the bank.If the deal goes ahead, ANZ would be the seventh owner of MYOB in the past 25 years, including two stints as a public company, the latter of which ended with KKR’s $2.4 billion privatisation in May 2019.The view inside ANZ is that MYOB has been transformed into a vastly different business with KKR’s investment and the leadership of Greg Ellis, the highly respected tech executive who previously ran REA Group. The business had revenue of $502 million last year, up from $445 million in its final year as a public company.The potential acquisition of MYOB also shows why Elliott announced in May he would set up a non-operating holding company to effectively split ANZ into a banking group and a non-banking group.The latter, in which MYOB would presumably slot, is designed to operate without the traditional constraints banks operate under, particularly capital requirements and regulatory obligations.Elliott likely had MYOB in mind when he said this structure would make it easier to “acquire, develop and grow new products and technologies”.