Bendigo and Adelaide Bank touts cost focus as benefiting tech project delivery

Bendigo and Adelaide Bank boss Marnie Baker says the bank punches above its weight in delivering technology and digital programs by being smart and more cost-conscious in its approach to the work.

At the close of analyst questions following the bank’s half-year results announcement on Monday, Baker was asked about strategies that had enabled delivery of a number of concurrent programs, given the bank’s relative size and technology budget.

“It’s a question we get all the time,” she said.

“I think being smaller than the majors means that you actually can be a little more nimble in relation to how you go about any of these large investment projects, and dare I say, there’s less wastage in the medium to smaller banks because you’re really conscious about every dollar that you’re spending.

"I just think we’re really smart in how we go about it, and we’ve got a great team in our organisation who are working really hard to get the benefits and outcomes for our customers and our shareholders.”

A number of programmes that the bank discussed at the end of last year are continuing into the calendar year 2024.

These include the continuation of efforts to consolidate its various operations onto a single core banking system.

It moved from running seven different core banking systems to four at the end of last financial year, and will eventually have the entire organisation running on top of Bendigo Bank’s core banking system.

“It made sense for that to be our target system that we’re moving to, just given that the majority of our customers were on that core banking system,” Baker said.

“That banking system has been around for a number of years, but I think it’s worth saying at the same time we are pulling apart that system in a sense of actually modularising, so we’re building on new technologies at the frontend around CRMs and CISs [customer information systems] and collateral management systems etc so the core banking system itself is really just the recorder of the transactions and the reconciliation to the general ledger etc. 

“Most of the other things - our pricing modules, product modules and so forth - are actually sitting in very new technology.”

While the bank had refined its core migration skills and processes, Baker noted that "we’re sort of rolling through [the remaining migrations] now, albeit that the last two core banking systems probably house the greatest number of customers."

Also continuing is a technology stack overhaul in its business and agribusiness division, which will see new origination and CRM platforms deployed, the latter based on Salesforce.

“Over the coming year, investments in a new lending origination system and customer relationship management system will help deliver process efficiencies that will significantly improve the experience for our customers,” Baker said.

“Once we get those things, then you’ll see process efficiencies and that creates much better outcomes in growth and productivity.”

The bank will also continue to expand the rollout of a new digital lending platform that it deployed to the first cohort of brokers at the end of last year.

“Currently we have 3000 brokers on board and have processed over 200 loans,” Baker said. 

“The preliminary results have been really positive, with unconditional approvals on par with industry best practice.”

Chief financial officer Andrew Morgan detailed a number of benefits that are anticipated from expanded use of the digital lending platform.

“Once we’ve completed the lending platform to brokers, we will then move to provide the same functionality across our branch network, and we see a number of benefits here,” he said.

“First, [we anticipate] a reduced average cost of manufacturing a mortgage; second, a deepening of relationships with broker-originated customers, from 1.7 products per customer today to between two and three over time; third, speed and certainty of decision for the benefit of customers, which should lead to higher volumes; and fourth, a further simplification of our technology stack.”

The bank reported a statutory net profit after tax of $282.3 million for the first half of FY24, up 13.8 percent on the previous six-month period.