Teachers Mutual Bank takes on big four with shared services

Teachers Mutual Bank will soon start rolling out shared technology services that it claims will change the way customer-owned banks do business and improve collaboration in the sector.

These services – which can be utilised by users of the Ultradata core banking system – could potentially create a multi-billion consortium that can tender for significant reductions in operational costs through vendor services, the bank said on Monday.

Customer-owned banks will gain initial access to a suite of digital services for the cost of one to two FTE staff per annum when the program starts to roll out in 2017. Mutual banks will be able to access increased third-party data integration, data cleansing, and the capacity to share digital data across the sector, said Teachers Mutual Bank’s CIO David Chapman.

A key benefit will be the reduction of cost-to-income ratios for participating custom-owned banks, he said.

“Currently, the average cost to income ratio for customer-owned bank is around 80 per cent, while for the major banks, it is about 45 per cent. We can and must drive this down to keep delivering for our members. Offerings such as our enterprise data warehouse technology will significantly level the playing field in regard to this disparity,” Chapman said.

The ability to realise the benefits of single source data services is something that the major banks – with their reliance on disparate legacy systems – can only dream of, Chapman claimed.

“Moreover, these shared systems mean that we can join together a force of mutual banks that will punch well above their weight with increased competitive vendor services, and superior digital services for members,” he said.

Regional Australia Bank has partnered with Teachers Mutual Bank on penetration security testing – a shared service that is being used by 12 different mutual banks.

Regional Australia Bank CIO Rob Hale said the penetration system had resulted in around a 40 per cent operational cost saving for the organisation.

“Through this shared service, it is possible to offer these critical cost savings to another dozen customer-owned banks who ordinarily couldn’t have negotiated such competitive terms,” he said.

Teachers Mutual Bank’s Chapman said shared services infrastructure, which is already being used internally at the bank, has reduced service times for home loan approvals and account changes.

They have also provide the bank with a better understanding of its member base, ensuring it can provide the right products to the right customer, and enabled staff to provide more responsive and personalised customer service to members.