Bendigo and Adelaide Bank technology modernisation "on track"

Bendigo and Adelaide Bank said its technology modernisation is well advanced and its transformation program is contributing to positive banking results.

In its half-year results on Monday, the bank recorded a statutory net profit of $249 million, up 49.3 percent. Cash earnings after tax came in at $294.7 million, up 22.9 percent.

Bendigo and Adelaide Bank chief executive and managing director Marnie Baker told investors these results “were supported by our ongoing transformation journey” with the program described as being “on track”.

“Through the first half 2022-2023 we reached some key milestones with the launch of our digital home loan, Up Home, the full integration of Delphi Bank and the delivery of PayTo to our banking customers," Baker said.

The bank also saw growth in customer numbers, partly driven by its digital proposition with neobank Up, which the bank acquired through its 2021 acquisition of fintech, Ferocia.

“Our transformation program is on track with the foundational work we have completed paving the way for an acceleration in our progress,” said Baker.

“Although our transformation program has been delivering for some time, we are beginning to see larger shift towards our financial year 2024 targets and our path to becoming a bigger better, stronger and more efficient bank is clear."

In addition to its Delphi Bank and PayTo implementation, Baker said over the half, the bank “delivered a new cloud-based product and pricing engine and a new collateral management system.”

“The product and pricing engine will significantly hollow out our core banking system and is a key enabler to further product simplification and much faster product development for our customers," Baker said.

“While the collateral management system will provide a single centralized source of truth for the group, simplifying frontline processes.”

The bank said it also improved customer analytics capabilities using the Google Analytics AI platform.

Baker also said the bank now has “fewer IT applications overall and has moved more of those that remain to the cloud”.

In addition, ,ore APIs are being reused, and the bank has “continued to grow the number of customers utilising our digital channels."

Bendigo and Adelaide Bank’s "digital investment continues"

In line with the bank's ongoing transformation journey, Baker said digital investment continues with Up reaching a “significant milestone for our digital assets” as customer levels hit 613,000, with a total of $1.3 billion in deposits.

Baker said Up’s digital home loan platform Up Home, which was “soft launched early in the half”, showed “significant promise".

In addition, Bendigo and Adelaide Bank’s own digital home loan offering, BEN Express, powered by home loan approvals platform tic:toc, “has delivered a milestone of its own and has now settled more than $100 million in lending.”

Its Qantas Money Home Loan, which only launched this February on the tic:toc platform, also showed the “benefits of our investments in digital”, according to Baker.

Baker added its partnership with mortgage lender tic:toc resulted in a loan portfolio of $2.9 billion at the end of last year.

“It is pleasing to note its expansion continues, attracting investments from IAG Firemark ventures to provide insurance within the platform," Baker said.

“These developments pave the way for a seamless home loan and insurance experience for customers.

"These digital channels are currently producing 8.9 percent of home loan settlements for the group presenting significant upside over the medium term.”

The bank also noted its average demographic shifted from 46 years to 43 years, with Up being “a large driver in the increase of millennials within our customer base.”

Investment spend boost 

Bendigo and Adelaide Bank chief financial officer Andrew Morgan said operating expenses increased by 4.9 percent from the previous six months, and were up 1.1 percent on the prior comparative period.

Rising to $523.2 million, Morgan said  “the vast majority of the increase" in operating expenses compared to the prior half "relates to a higher level of expensed investments spend as we ramped up the investment in our transformation program."

“We also continue to invest in our Ferocia business and specifically into the Up platform," Morgan said.

“Technology-related costs were higher reflecting vendor cost pressures, the more extensive use of cloud and nonlending losses were also a little higher.”