Bendigo and Adelaide Bank sees results of its digital transformation

Bendigo and Adelaide Bank reduced the number of core banking systems and technology applications during 2022, while its digital bank Up reached over $1 billion in deposits.

In its full year 2022 results the bank reported it dropped one core banking system over the year with plans to reach its target of one bankwide platform by FY24.

CEO and managing director Marnie Baker said the next phase of its transformation program will have a focus on tighter focus on returns, execution and sustainable growth despite the “external environment” becoming “more complex”.

“Our path to becoming a bigger, better and stronger bank is clear. We have reduced the number of core banking systems and technology applications.

“We have more applications in the cloud, more APIs being re-used, and more digital customers. Our time-to-decision for home lending has improved and we continue to consolidate the number of suppliers we use and uplift our risk management frameworks and capabilities.”

Over the year the number IT applications dropped to 491 from 650, with a target of 325 over the next year and 19.9 percent of its applications were now in the cloud.

It reported its digital sales reached 23.9 percent over the year, and 68 percent of its total customer base are active e-banking customers.

Baker added its acquisition of Melbourne-based fintech Ferocia for $116 million, in August last year, will “deliver enhanced capability to reengineer our business for the digital age.”

The fintech underpins neobank Up, which also delivered digital home loan product Up Home during the year, and now has more than 500,000 customers and over $1 billion in deposits.

Partly pushed along by Covid-19 Baker added its BEN Express digital home loan offering powered by home loan approvals platform tic:toc “settled more than $50 million in loans in FY22.”

“Our investment in digital offerings and ways of working is driving significant uplift in how we distribute products and services to our customers – providing a more accessible, convenient and engaging experience for customers who choose a digital experience,” said Baker.

“The very recent launch of Up home loan and the continued leveraging of the [mortgage lender] tic:toc platform for both Up and BEN Express a great example of this and areas where we are punching above our weight.”

Investment spend across the year

The bank’s investment spend reached $166.6 million over the year with 55 percent spent on ‘foundational technology’ and 32 percent put towards risk and compliance.

The bank reported it will continue to invest for longer-term simplification benefits at current levels through FY24, before declining.

The bank’s operating expenses reduced by $19.1million or 3.7 percent over the half to $498.6 million. Over the year operating expenses fell $11.1 million or 1.1 percent to $1,016.3 million.

Recently appointed chief financial officer Andrew Morgan said the bank is “very deliberately balancing between the need to invest in our business and support growth” plus “take costs out at the same time.”

“Working through some of the drivers there are certainly inflation pressures in the system which we're managing,” Morgan said.  

The bank reported a statutory net profit after tax of $488.1 million, down 6.9 percent from the prior corresponding period, while its cash earnings after tax reached $500.4 million, up 9.4 percent.