MyState Bank and Auswide Bank have announced plans to merge. They aim to streamline their core banking systems and achieve savings of up to $7 million on technology expenses.
The merger, formalized through a binding scheme implementation agreement. It will unite Tasmania-based MyState Bank and Bundaberg-headquartered Auswide Bank. Meanwhile, bringing together 272,000 customers across Australia.
The banks have made significant progress in shaping the IT architecture for the newly merged entity.
MyState Bank currently relies on TCS BaNCS for its core banking and Backbase for digital services. If the merger is approved, it is expected to result in $20 million to $25 million in pre-tax cost savings. Ultimately, with nearly a third of these savings coming from IT.
However, the merger will likely incur synergy costs of up to $29 million. It will cover technology platform migration, redundancies, and other one-time expenses.
MyState Bank CEO Brett Morgan shared with shareholders in a webcast that the consolidation of core banking systems is expected to be completed within 18 to 24 months of the merger.
MyState Bank reported spending $21.4 million on technology
In its full-year results for the 2024 financial year, MyState Bank reported spending $21.4 million on technology. Which account for 20% of its overall operational cost. This marked a 12% increase from the previous year.
The bank explained that the rise in technology costs reveals ongoing investments in key customer, risk, and regulatory initiatives.
Meanwhile, Auswide Bank has also seen a rise in IT costs. Particularly in areas like cybersecurity and fraud prevention. The bank told shareholders it is continuing to invest in technology, data security, and IT and risk management functions.
According to Auswide Bank, the new company will feature an accessible end-to-end technology platform with potential for growth.
MyState Bank has been undergoing digital transformation over the past few years. This transformation includes launching a new internet-mobile app and New Payments Platform (NPP) and Osko for instant payments.