Bendigo and Adelaide Bank is spending more on IT as it accelerates a modernisation and simplification strategy.
Australia’s fifth largest bank reported in its first half 2022 financial result IT costs reached $42.8 million, compared to $38.9 million in the same time the year prior.
Its total operating expenses reached $517.7 million, rising 1.5 percent compared to the end of the second half which reached $510 million in 2021.
The bank partly put down the increase spend over the past six months to costs of onboarding Ferocia staff in September 2021 following its acquisition last year.
However the bank noted its software costs decreased as a number of significant technology assets became operational during the half.
The bank continued investment in its cloud transformation project remained steady at $42.1 million, a slight drop from $49.8 million recorded at the end of the last half.
Speaking on the results managing director and CEO said Marnie Baker told investors the “pace of our transformation agenda continues to accelerate.”
“We are moving applications to the cloud, which improves our efficiency and technology resilience,” Baker said.
“We are reducing ‘time to decision’ for our customers seeking a loan and will launch our fully digital home loan offering Up Home in the months ahead.”
Baker said the bank is “getting on with the job” of modernising the bank by removing complexity and creating additional capacity.
Baker reported the bank has moved 13 percent of applications to the cloud and automated decision-making technology is now being used on third party home loan applications with plans to scale up over the next 12 months.
The bank also reported about 25 percent of sales are coming through digital channels and 66 percent of customers are active e-banking customers.
In August 2021 the bank purchased Ferocia, the Melbourne-based fintech that underpins its banking app and is a joint partner in neobank Up, for $116 million.
The bank completed the acquisition over the half and is now focused on using the Ferocia purchase to help fast-track its strategy.
Ferocia is expected to help Bendigo and Adeliede Bank shift towards more digital customer offerings and simpler products.
Baker reported since the acquisition the bank is on track to “launch our fully digital home loan offering Up Home in the second half of financial year 2022.”
Up Home is due to launch by leveraging mortgage lender platform tic:toc, which Bendigo and Adelaide Bank have a 27.2 percent shareholding.
The bank is currently in the midst of integrating its brands including Delphi Bank and is expected to be finalised by the end of the financial year 2022.
Baker said the results “clearly demonstrate that our strategy is making us a bigger, better and stronger business for all our stakeholders.”
“The investments were making the digital capability are opening up new markets and bode well for future growth and return,’ Baker said.
“We are now entering a crucial phase of our strategy with the benefits of this work to be realized for years to come.
“We remain focused on executing the strategy that has served as well. Staying focused on cost, lifting productivity and driving long term sustainable returns for our shareholders.”
The bank reported a statutory net profit of $321.3 million, up 31.7 percent from the same time last year and cash earnings of $260.7 million up 18.7 percent from the year prior.