Teachers to double up on innovation spend as it eyes neobank rollout

  • By Christine St Anne

Teachers Mutual Bank will double its investment spend on a significant online banking service upgrade that will also underpin its neonank as it reported a 5 per cent dip cent fall in net profit to $25.7 million. 

On Wednesday, the bank announced its annual results for 2019-20, reporting a $4.8 million spend on a range of projects aimed at improving technology and driving a better customer experience. 

In fiscal 2002, the bank aims to grow this spend to $8.6 million.

“The wider acceleration towards digital delivery, including the opportunities to come with open banking, led to a recent Board-approved decision to adopt a digital-first strategy including the launch of a digital platform,” Teachers Mutual CEO Steve James said in a statement. 

Speaking to AB+F, James (pictured with chair Maree O’Halloran) said the impetuous to digitise was even more urgent as the health pandemic unfolded in March. 

At the same time, people are becoming more digitally focused. 

Teachers Mutual Bank aims to roll out its neobank – previously announced – at the beginning of 2021. 

While James will be providing more information around the strategy, he outlined a number of services he envisions from the rollout. 

“It will have similar offerings to the services provided by other neobanks such as faster onboarding, digital cards and online loans.

“It will have a range of services but not all the full banking services that our relationship banks – UniBank, Firefighters Mutual Bank and Health Professionals Bank provide. 

“We will be providing further detail, but it will definitely be a fifth brand for us.” 

Cloud technology will also be on the agenda as part of the bank’s upgrade. 

“By the end of 2021 and early 2022 we expect to be moving to the cloud,” James added. 

The bank also managed to grow its lending book – keeping its 20-year record of above system growth at 2.62 per cent. 

This was underpinned by growth in first home loans scheme as well as refinancing. 

Membership is also up to nearing 211,000 members, with membership growth of 8,984 in fiscal 2020. 

Net-interest-margin was 1.86 per cent, broadly in line with the previous corresponding period. 

Given the bulk of its membership base are essential workers – teachers, firefighters, health workers – the bank did not have to manage a significant number of mortgage deferrals.

As COVID-19 began, 4 per cent of it loan book had mortgage deferrals but now it stands at just 1 per cent.