Posted: 15 Jul. 2022 5 min. read

Asset Light Operating models from a New Zealand lens

Are you locked into the wrong assets?

Traditional business operating models have been challenged over the past two years, driven by COVID-19 ways of working, an increased uptake of digital channels and new regulatory requirements. Whilst this has been happening across all businesses, it has been particularly acute for banks. The nature of operating model change has varied across organisations and geographies, resulting in extensive research highlighting the importance and shift towards an ‘Asset Light Operating Model’.

What is an ‘Asset Light operating model’?

The key differences in how incumbents and challengers operate have been compiled from research by Deloitte Asia Pacific and are summarised below. These differences drive better efficiencies, valuation ratios, customer and employee desirability.

Incumbent operating model (asset heavy)

Challenger model (asset light)

  • Heavy, costly, long standing asset base (e.g. branch network, large HQ and regional offices, core inhouse/customised systems).
  • Large programme and spending to maintain technology and meet regulatory requirements.
  • Heavier reliance on large inhouse workforces with lots of manual work in high-cost locations.
  • Business setup is asset light: flexible, variable, and easily disposable.
  • Best of breed technology.
  • Cash supports growth initiatives.
  • Flexible work practices, supporting a hybrid workforce.
  • Competitive advantage shifts to data & insights and ability to attract talent and innovation.


How are businesses reacting?

To better understand the implications and respond to the demand for Asset light Operating Model work, Deloitte Australia conducted a survey of financial services organisations across major Asia Pacific financial centres.

Within the survey, 41% of the business community signalled significant operating model transformation over the next two years, driven by the intention to enhance technology capabilities and meet the demand for remote engagement by customers. Survey respondents also anticipate an overall increase in operating model initiatives which span the organisation. These include:

  • Improving/redesigning channel strategy to respond to the volume of services offered and delivered via digital channels to meet shifting customer preferences.
  • Redefining branch strategy to align the scope of services offered, target customer segments and increasing or decreasing footprint with the organisation’s strategic ambition.
  • Reconsidering ‘ways of working’ to attract and retain employees e.g. redirecting office space to suburbs, converting general office space to collaboration areas and upgrading to a more premium environment.
  • Designing and operationalising transformation programmes to balance the execution of discrete initiatives with business-as-usual services offered (e.g. increasing prevalence of short term, cross functional project teams).
  • Implementing organisation structure change to redesign departments and jobs, integrating machines and humans in the future workplace.

How does the ‘Asset Light operating model’ impact the New Zealand banking sector?

The New Zealand banking sector is not immune from the challenges experienced by other banks in Asia Pacific, including the need to ensure customer satisfaction. Consumer NZ reports that 60% of New Zealanders are satisfied with their bank’s service across five key performance measures - advice on products, fees, responsible lending, timely responses to inquiries and value for money. 

However, there is still dissatisfaction about the sector from customers. While our regulators have addressed some of the underlying drivers of poor customer satisfaction through regulation designed to keep banking customers safe, there is still much to do on the overall customer experience. 

Customers are well known to judge the digital experiences in one industry by what they experience in another industry, and this is one area where Fintech businesses with Asset Light operating models have been able to create a real point of difference to incumbent banks in other markets.

New Zealand banks are currently undertaking a significant technology uplift and move to the cloud.  Whilst some of this will be driven by parent company decisions (for those that are offshore owned) all of our banks have the opportunity to shape their operating model around these investments.  In our view, having a position on the role of an ‘asset light’ operating model is an important counterbalance to technology driven investment. 

By taking note of what the challengers are doing our banks should be able to deliver digitisation initiatives which provide a more responsive service offering thereby improving customer experience and increasing market share.

How you can learn more

Key results of this survey have been compiled into a series of six blogs which examine the differences between Incumbents, Challengers and Leaders v Laggards. The series of blogs can be viewed here.

Get in touch

If you are interested to hear more or for a ‘deep dive’ on this analysis, contact us here

Grant Frear

Grant Frear

Guest blogger
Leader NZ Financial Services Industry Practice

As one of the senior Consulting partners at Deloitte New Zealand, I lead our Deloitte Digital and banking sector teams. I specialise in technology-enabled business strategies, focusing on financial services clients.  I enjoy helping businesses develop and implement great strategies to help them achieve their business goals. While I admire great strategies, I have a lot more respect for those that can implement them. The world of business and technology is developing at pace, things that were once out of reach for many New Zealand businesses are now a reality. So to really take advantage of this, business needs to have a mind shift. Small is the new big - innovation is critical as the challenge shifts to how you can pull together the options that are now available to you. Well thought out strategies are great, the ability to execute is critical.

Nicholas Tee

Nicholas Tee

Senior Consultant - Strategy & Business Design

I am a Senior Consultant in the Strategy and Business Design practice at Deloitte NZ. I am passionate about assisting organisations in bringing their strategic objectives to life, with previous experiences in strategy development, strategic planning, financial analysis and operating model design across the public and private sector.