MyState Bank and Auswide Bank's planned merger to save $7m in IT costs

MyState Bank and Auswide Bank have unveiled plans to merge, which would entail a consolidation of their core banking systems and savings of up to $7 million on technology costs.

Tasmania-based MyState Bank and Bundaberg-headquartered Auswide Bank have entered into a binding scheme implementation agreement that will bring together 272,000 customers across Australia.

Work is already "well-progressed" [pdf] to determine the IT architecture of the newly merged entity.

MyState Bank currently uses TCS BaNCS for its core banking system and Backbase for digital banking.

The merger, if approved, would save the publicly listed entities $20-to-$25 million in pre-tax costs [pdf], almost a third of which will consist of IT costs.

However, the merger is likely to incur synergy costs of up to $29 million, which will include migration of technology platforms, redundancies and “other one-off costs”.

MyState Bank CEO Brett Morgan told shareholders in a webcast that a core banking consolidation should be completed within the first 18-to-24 months of the merger.

According to its full-year results for financial year 2024, MyState Bank spent $21.4 million on technology, a fifth of its overall operational spending.

Its tech spending marked a 12 percent increase from the previous year.

“Technology costs increase reflects continued investment in key customer, risk and regulatory initiatives,” the bank said in its FY24 results.

Meanwhile, Auswide Bank said it was seeing higher IT costs, especially in cyber security and fraud prevention.

The bank told shareholders it was “continuing investment in technology, data and cyber security and skills in IT and risk-based functions”.

The new company, according to Auswide, will have a “scalable end-to-end technology platform with potential growth strategies”.

Tech transformations

MyState Bank has been undergoing a company-wide digital transformation over a number of years, which is officially due to end in this financial year.

The transformation has seen MyState Bank launch a new internet-mobile app and drive the uptake of the New Payments Platform (NPP) and Osko for instant payments.

Speaking to the iTnews Podcast in 2022, MyState's general manager of technology, operations and product Paul Moss, said the bank had consolidated multiple core banking systems, introduced a new CRM, and introduced "digital origination" for all its products "across the board".

Auswide, meanwhile, has also spent the past few years carrying out a digital uplift spanning four pillars.

Speaking on the iTnews Podcast in 2021, chief transformation officer Rebecca Stephens said the uplift consisted of revamping the bank’s service offering to its brokers and customers; providing more choices in how customers can engage with the bank and its branch network; automating processes; and uplifting digital experiences to attract a new generation of customers.