MyState Limited is forging ahead with a “significant program” of digital and technology works that is attached to a broader growth strategy the ASX-listed financial group is pursuing through to the end of FY25.
In this week’s episode of the iTnews Podcast, MyState’s general manager of Technology, Operations and Product, Paul Moss, discusses the evolution of technology strategy and architecture in MyState’s banking and wealth management operations.
There are three pillars to MyState’s technology strategy from now through FY25, which are to build digital-first capabilities, and to drive improvements to payments and lending.
Scaling up digitally is particularly critical to MyState’s growth ambitions.
MyState’s roots are in Tasmania, where it continues to have substantial operations, but it is also expanding its mainland reach, with employees on both sides of Bass Strait, requiring sophisticated digital systems to serve its growing customer base.
“Increasingly, we're looking to the eastern seaboard of Australia to attract new customers to the bank - customers, of course, who will engage only via digital solutions,” Moss said.
“Continuing to build out our digital service delivery and attracting those customers interstate will lead to scale.”
While the current digital work is nominally part of the FY25 strategy delivery, in reality Moss sees the efforts as having no particular end date.
“We began our digital transformation many years ago, and it'll certainly never be finished,” he said.
“As the saying goes, it's like painting the Sydney Harbour Bridge, and it certainly feels that way.
“But with so many new options coming to the market, we've got a strong program of investment for digital. We're launching our new internet-mobile app, and have a lot of people working on that as I speak.”
In the payments pillar, Moss’s team is driving uptake of the New Payments Platform (NPP) and Osko for instant payments.
Further enhancements will launch this year with NPP PayTo, which is essentially a way of enabling real-time direct debits and, like other institutions, is also exploring its options in the buy now, pay later (BNPL) space.
The lending pillar is similarly about enabling home loan processes to operate faster and more efficiently.
The bank’s loan book has grown and diversified in recent years, with less than 40 percent of loan customers now from Tasmania. Customers in the other states and territories interact with MyState fully digitally.
Moss said that MyState wanted to move to more real-time and automatic decisioning for loans, with some guardrails to maintain responsible lending and to ensure that customers remain at the centre of these processes.
“What do customers want? What do brokers want? They want rapid approval of loans,” Moss said.
“Auto approval of loans is our target state but also wrapping in responsible lending parameters, which we take very seriously and do right.
“We’re looking for auto decisioning in a way that gives brokers and customers the answer they want quickly but also recognises that a quick no is often as good as a quick yes.”
Moss said that while there were sometimes news headlines claiming “auto unconditional loan approval in seconds, frankly when you peek behind the covers, it's often of little substance.”
He sees the continued embrace of open banking - which could afford lenders greater insight into a customer’s financial position, with their consent - as a key input to speed up approvals.
“With those data sources now becoming more ubiquitous, I would suspect loan assessments, approvals and the ability to enrich decision-making with data will only improve,” he said.
Moss has been with MyState for about seven years and counts himself “very fortunate to have overseen much of the digital transformation work we’ve undertaken in that time.”
“We've consolidated multiple core banking systems, we've introduced a new CRM, we've introduced digital origination for our products across the board, and of course, we’ve done much work in the payment space with all of the ‘pays’ - Apple, Google, Fitbit, Garmin,” he said.
Moss oversees a full quarter of MyState’s 360 FTE staff, which work in the Technology, Operations and Product - TOP - area of the organisation.
“It should probably begin with ‘Product’, but I was told that TOP [as an acronym] sounds better than POT,” Moss said.
“We’re responsible for, as the title suggests, working out what customers want and then conceiving of and designing the product; in technology, building it, delivering it, hosting it, managing it; and then in operations, administering the products and dealing with customers.”
The past seven years, particularly in Moss’s area, have been characterised by large-scale simplification.
“We like to keep things simple,” he said.
“It's a rule that we really live by. So, simple to build, simple to administer, and moreover, simple for our customers to understand.
“When I joined the bank, we had many, many products. We had versions of products, we had versions of versions of products.
“We've spent quite some time consolidating them so we've now got a savings account, we've got a transaction account, and we've got a few other smaller things, but really our portfolio is simple.
“Staff appreciate that. Now, if somebody comes in for a home loan or a term deposit, it's easy to talk to the customer about those products.”
The simplification effort also extends to MyState’s technology stack as well.
“We have got a very simple stack, and my goodness, we do that by design,” Moss said.
“It certainly makes for much more straightforward management and deployment of systems, and it's something that we really aspire to.”
A key part of the environment is an enterprise service bus or middleware layer that was put in place five years ago to afford MyState more flexibility in making its chosen systems interoperable and able to exchange data.
“Core banking systems are not always renowned for being the most interoperable of systems, so the introduction of the enterprise service bus really allowed us to abstract from the core, so to speak, and have a much more contemporary way of interacting with that core programmatically,” Moss said.
“It certainly meant that in recent times, we’ve been able to introduce and interconnect more third-party applications and digital solutions with the core.”
This middleware layer also enables Moss’s team to act as a kind of “systems integrator” for the business.
“If I think about our digital solutions, we've often got five suppliers, five systems, all adding up to provide a digital solution, and so we sit in the middle playing that systems integrator role, and managing our enterprise service bus which interconnects the systems,” he said.
MyState’s primary core systems are a TCS BaNCS core, Sandstone Technology’s LendFast for loan origination, Temenos as the foundation of a new digital banking app, Microsoft collaboration and CRM, IBM middleware and the Cuscal Payments switch.
It also makes use of robotics process automation (RPA) software from the vendor UiPath.
While a relatively “late starter” in the RPA space - the high cost of entry initially made it challenging to mount a business case - Moss said that MyState has become “a very fast follower” and now has over 40 business processes automated with bots.
Several of these bots operate in the lending space and are intended to speed up certain processes that were previously manual or overly intensive.
“When we unconditionally approve a loan, we now send an email to a broker,” Moss said.
“That was for many-a-time a manual process and now the bot does it.
“So the bots are logging into the loan origination systems, looking for approved loans, and the minute one does get unconditionally approved, it grabs it, sends the email, and sends all of the requisite documents to the broker.”
Bots also now handle the distribution of loan documents to the customer.
“We deal with a third party to provide the loan documents to customers for them to sign - that same third party also deals with settlements,” Moss said.
“We were approving a loan and then writing up a Word document with the details of the loan to then email to the third party for them to produce the documents.
“Today, our robot is talking to their robot. So one of our bots logs in, looks for the approved loans, again grabs the details, jumps online, connects to the robot at the third party and says, ‘Here are the details of the loan’.
“That process probably saves 25 minutes per loan. If we're doing 100 loans a day then the time saving is significant.”
Reducing manual intervention and effort meant that MyState’s staff can use the time to maintain a personal touch with customers - both brokers and home loan holders - something that is central to the company’s ethos.
“The more time we can spend engaging with brokers and customers, the better off we are as a business,” Moss said.
“If the robots can take care of the grind work behind the scenes, then so much the better.”