BOQ plans to confront big four in game-changing acquisition
Bank of Queensland plans to become a competitive alternative to the major banks following the purchase of ME Bank with its cloud strategy well positioned to manage the bank’s multi-brand strategy.
On Monday, BOQ announced the $1.3 billion purchase of ME Bank which had already been flagged in the media.
The purchase price will be funded by a capital raising.
The deal boosts BOQ’s customers from 900,000 to 1.45 million with ME Bank sitting along the other two brands: BOQ and Virgin Money.
BOQ CEO George Frazis called it a “game changing” acquisition, a phrase he repeatedly used during the analyst and media presentations.
He said the acquisition allows the bank to boost its scale and accelerate its digital offering.
A number of banks have adopted a multi-brand strategy and Frazis was questioned on how plans to succeed with the strategy.
One analyst queried that a similar strategy was not entirely successful when Frazis was at Westpac,
Frazis said the BOQ’s cloud strategy will enable all three brands to be included under one core banking platform.
“With a cloud-based strategy there is no need for customization,” this means ME Bank will be able to operate as a distinct brand in the core banking platform without any significant change to the bank’s systems.
“We have got a banking platform that is really efficient and is also able to add innovation for our customers.”
This cloud-base strategy will also position the bank to compete with the big four.
“Retail and small business banking is something we do know really well and that has been shown in the way we have performed over the last 18 months,” Frazis said.
“What has been really unique and why this is a game-changer is that we are able to do all of this on a cloud-based system. We are not fixing any of the old and building the new.
“Although the brands have different front line bankers, they will be powered by a state-of-the-art system.”
According to Frazis the three brands will target different segments.
Customers of BOQ are more mature and prefer “personal and empathetic face-to-face relationships,” while Virgin Money is tailored for the younger, digitally savvy consumers. He sees ME Bank with customers that are slightly more mainstream but are digitally aware.
“We did a very detailed due diligence process in getting to this decision. We have been working on it for a while.
“We are very confident that we can continue to strengthen [ME Bank’s] operations and regulatory framework.”
On the job front, Frazis wouldn’t be drawn into the extent of job losses.
“It is important that we stabilise our workforce to ensure that we continue to grow. It will be another 12 months before we go after synergies in other areas.”
Bank of Queensland also announced a trading update for its first-half results in April. The bank expects cash profit growth of 8 per cent, driven by growth in its loan book.