Heritage Bank may be able to “jump” its own planned digital transformation upgrade if a “merger of equals” with Adelaide-based People’s Choice Credit Union is approved.
In this week’s episode of iT news podcastPeter Lock, CEO of Heritage Bank, discusses the impending unification of the two organizations and how the IT ambitions of the two are aligned.
First proposed in 2021, the merger is expected to result in one of Australia’s largest customer-owned banking institutions – with around 700,000 members and $22 billion in total assets.
Following final approval from members, regulators and government, the Toowoomba-based mutual plans to integrate its core banking systems with People’s Choice, create a mutual alternative to big banks.
People’s Choice is already going digital by adopting the core banking platform Fiserv and a new CRM system from Salesforce.
Lock said that through its own process, Heritage Bank had also independently selected Fiserv as its preferred future core banking platform.
“Obviously it makes the merger much more attractive when we move to a single platform,” he said, adding that Heritage Bank would switch to Fiserv “whether the merger is successful or not.”
“We decided that our core platform was no longer suitable for the bank we wanted to become, and we needed to transition to a platform that was going to allow us to accelerate our digital offerings,” Lock said.
“The upgrade that People’s Choice is going through right now is the platform that we would have chosen. They will complete that upgrade, and then we [will] jump in there.
“It looks very easy and I know it’s not, but it’s a leap we would have taken anyway.
“We believe this will allow the newly merged entity to have a truly contemporary banking platform and supporting systems that will allow us to continue delivering the digital transformation that all banks need.
“We are confident that we will be ahead of the pack now, and that we will not be left behind.”
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Lock said the two organizations are having conversations about future integration strategies.
“We have onboarding streams currently working between the two organizations to address the practicalities of getting [us] operating as one bank [from] first day,” he said.
He thought a technology transition “would take about three years.”
“We identified the different systems that operate between the two organizations,” Lock said.
“We are now at a stage where we really have to choose which systems, outside of the kernel, will be the systems we think are best suited for the merged entity.
“We need to look at which ones we think will deliver the best results for the target markets we’re aiming for.”
This would mean choosing a product creation platform, a credit risk management system, a set of fraud protection systems, a customer relationship management system, a credit framework, etc.
“We’re moving to a single operating system, one set of processes and one platform…the resulting synergies are where the benefits of the merger lie,” Lock said.
The merged entity aims to grow its membership base from 770,000 to “1 million and then further”.
“To do that, we need to have the types of products and channels that will be attractive to new members, while being adaptable to our existing members,” Lock said.
Lock hopes a new core banking platform will help attract a younger customer base, while keeping its existing customer base satisfied.
While the proposed merged entity’s new board and executive structure was announced, with Lock remaining as CEO of the new entity, he added only a chief information officer (CIO) position. is currently being recruited and is expected to be announced around the same time. as final merger approvals.
Lock also said that once approvals are in place, an “IT bridge” will be put in place between the two organizations’ systems so members can continue to bank seamlessly.
“It’s just a question of whether they can come in and start transacting under the other bank’s banner, but all normal banking services of both brands will continue as normal.”