Bank of Queensland said it has made “significant” transformation progress in the first half of the financial year, having entered the final stages of its digital ME Bank integration.
An increased technology spend partly drove higher operating costs for the half, the bank said.
Managing director and chief executive Patrick Allaway told investors that “significant progress in our transformation” had been made.
The ME Bank acquisition had also “improved our strategic position", Allaway said.
BoQ’s ME Bank’s standalone integration program, a major step to becoming a cloud-based digital retail bank technology platform, has now reached the final year after the 2021 acquisition.
Core customer and digital product growth
Allaway also said its new core banking platform, which houses the Virgin Money Australia (VMA) brand as well as new BoQ Retail bank customers, now has “over 170,000 customers”.
The new platform holds over $3.8 billion of customer deposits in transaction, savings and investment accounts across both the VMA and BoQ brands.
Under its transformation roadmap, BoQ plans to leverage the VMA and BOQ foundations to offer ME Bank retail customers an improved customer experience, with this work expected to be finalised by the second half of this year.
The bank also reported progress on a multi-brand loan origination platform which is on track to deliver cloud-based home loan capabilities by FY24.
“We are on track against our digitalisation roadmap," Allaway said.
"We know from data globally that simple and targeted digital models are not only levelling the playing field but are als enabling smaller players to outperform the big banks.
“One initiative we've accelerated now with digitalisation is the buildout and migration of ME Bank customers onto the new digital platform, which will provide current and new ME customers with the best digital experience possible from transaction accounts to mortgages.
“It also enables us to decommission redundant systems earlier to provide an early proofpoint in FY25 of a digital low-cost, scalable, national brand and operating model.”
Strategic approach
Allaway, who has shouldered the role of CEO since George Frazis departed BoQ last year, said the group is committed to “building social capital through banking” and is “taking an even more holistic and integrated approach to the transformation program”
He said this strategic approach will “deliver a stronger, more resilient bank with a simplified structure, reduce duplication, and increase productivity” and lead to “a digital bank that can grow at scale”.
As it moves through its simplification efforts, BoQ noted it has consolidated 66 technology systems since 2020, with the next phase aimed at “aligning the structure of our organisation to our target customer segments and business model, reducing duplication through an integrated model and leveraging the automation of processes.”
BoQ has also committed to invest $60 million in an integrated risk program aimed at improving "systems, processes, and risk and compliance outcomes, including AML [anti-money laundering].”
Technology spend up
BoQ boosted its technology spend in the first half by $20 million.
The boost meant its total technology expenses reached $143 million, partly driven by inflation and digital transformation which raised IT services and amortisation expenses.
Its IT service costs increased owing to higher usage volumes and investment in cyber risk mitigation, while amortisation increased by $8 million or 27 percent, pushed along by investment in the digital bank and in data capabilities.
Overall, BoQ's statutory net profit after tax was $4 million, down 98 percent, due to the continued ME Bank integration costs.
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