Mobile and online bank, ME, has completed a $90 million, five-year IT transformation that allows it to maintain a single record for its 320,000 customers.
ME, which is owned by 30 super funds, finished closing its branch network 18 months ago to become a fully digital bank. Since 2010, it has employed 25 vendors and around 700 personnel to write more than 1 million lines of code during a transformation that was completed using Agile development methodologies.
Mark Gay, CIO at ME, told CIO that ME went through the transformation to ‘de-risk’ the bank, reduce the time it takes to launch new products, and get straight-through processing in place to make the bank more scalable.
“Like a lot of banks we were hamstrung with a whole bunch of legacy that made it hard for us to be productive. The cost of not executing change was extraordinary,” Gay said.
ME has rolled out a new Temenos T24 core banking platform, providing the single customer record. The bank is also running a webMethods enterprise services platform to integrate various systems, and Pega business process automation system.
A key challenge during the transformation was understanding exactly how the bank wanted its products to work now and in the future.
“It’s not like we were dealing with a set of business requirements for the old system that you can just translate into the new system. As a bank, our product is technology. We don’t make widgets, we actually have systems that calculate interest, process payments and print out statements so it’s quite a fundamental piece of work to go through and get those requirements right,” said Gay.
Gay said ME has replicated as much of its existing product offerings into the system as possible, and customers are able to transact faster with the bank.
He said 50 per cent of the banks home loans are conditionally approved by the system and the time it takes to get this approval has been cut from 3 days to 3 minutes.Read more: Mark Gay new ME Bank CIO
“Customers can open a transaction account with us today completely online with absolutely zero human intervention at all. Within five minutes, you’ve got an account open,” Gay said.
Currently, 60 per cent of ME’s transaction and account openings are now being completed by customers using its new online application process.
“We’ve seen a big increase in online throughput … having this productivity in place has allowed us to run campaigns and launched products that we haven’t done before,” said Gay.
"We ran a 3.99 per cent fixed rate promotion for a period of time and we were pumping through 10 times our previous volume – we were doing two weeks’ worth of business in a single day and we just don’t have the scale to sustain that without the technology,” he said.
Gay said although the transformation has driven up productivity, the bank hasn't needed to cut costs because it has grown at a faster rate without increasing costs.
"We will grow our net profit after tax by about 25 per cent over the next 12 months but we will not grow costs anywhere near that, we will hold them relatively flat," he said.
Meanwhile, ME CEO, Jamie McPhee, said one of the most important outcomes of the transformation is the ability to offer competitive variable home loans.
“Our old technology restricted us to one variable home loan product. Transformation means we can offer new variable rate home loans priced competitively.”
McPhee added that big data is the new battleground between bank-owned super funds and industry super funds and the bank is now able to analyse data to help its industry fund owners.
“Thanks to the transformation, we can detect when customers have had a change in circumstances. This provides data trigger points for cross-selling super if they’re not with an industry super fund and for building loyalty if they’re with an industry fund,” he said.
“Because it’s easier to plug new functionality into our systems, we’ll also be able to display super accounts through our internet and mobile banking platforms in the future.
“That means members of industry super funds will be more engaged with their super balances and their funds,” he said.
Follow Byron Connolly on Twitter:@ByronConnolly
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.