Bank of Queensland (ASX:BOQ) has seen its IT expenses increase to $92 million for the year ending August – a 12 per cent rise on the $82 million in IT expenses it cited the previous year.
The company, which revealed its IT spend in its latest annual report to shareholders, said that, of its $92 million IT spend, $64 million went into data processing. Meanwhile, $27 million was attributed to amortisation of intangible assets, which was up by 59 per cent on the previous year’s figure.
As reported by CIO, the company signed a five-year IT services contract in 2014 with long-time technology partner, HP, in its efforts to reduce the complexity of its IT environment, while standardising and improving the delivery of its IT services across the organisation.
The deal with HP followed a prolonged 10-and-a-half-year contract with the technology giant. At the time, the bank told shareholders that the renewed partnership would help it to increase the speed and quality of it project delivery while reducing overall IT operating costs.
The bank is in the midst of a transformation process, part of which involves delivering technology that can help to improve customer experience and reduce turnaround times, and transition legacy manual processes to a more digitised environment.
Additionally, a new investment is underway to transform the BoQ Finance Leasing Platform from more than 20 separate systems into a single “market-leading” system aimed at improving customer experience while reducing legacy costs and risks.
“The delivery of a number of key initiatives during the year resulted in an uplift in the amortisation profile of $10 million. BoQ has continued to invest in areas that improve the overall customer experience, productivity, and efficiency,” the company told shareholders in its latest annual financial report.
“BOQ continues to drive its digital capability with a focus on delivering technology that will enhance the customer experience, including the digitised mortgage origination platform, an upgrade of the banking app (both BoQ and Virgin Money), a refresh of the ATM network, and the e-statements initiative,” it stated.
Bank of Queensland is one of many leading banks in Australia engaged in some kind of technology-based transformation program, with the so-called “Big Four” -- Westpac, Commonwealth Bank of Australia (CBA), ANZ, and National Australia Bank (NAB) -- all investing heavily in technology.
CBA alone reported $1.49 billion in IT services expenses for the financial year ending June, up by 15 per cent from its previous year's expense tally of $1.29 billion.
The bank cited higher software amortisation, increased investment spend, and volume-driven maintenance and data processing costs as the factors behind the rise in IT services expenses for the year.
At the time of writing, Bank of Queensland's share price stood at $11.185.