Suncorp Group (ASX:SUN) announced on Wednesday a technology optimisation program to bolster the company’s business structure. In its Investor Day Presentation, the insurance giant said it would invest $75m for the optimisation program, with the aim to reap $170m of “efficiently benefits” from the initial investment. The program will complete an ongoing redesign of the company’s operating systems. The savings introduced by the new technology program include improved efficiency of processing claims, motor vehicle repairs, home repairs, procurement, and technology and business intelligence.
Suncorp noted that this was the final stage of its business restructuring. “I have always said there is more gas in the tank and beyond the next wave of efficiency gain we can now demonstrate the benefits of our diversification,” said Chief Executive Officer Patrick Snowball. “We are seeing improved performance and growth coming from our Bank, Life, Commercial Insurance and New Zealand businesses.” The benefits and savings from the technology program are expected to be delivered by FY2018. Two of the major upgrades have been dubbed “Simplification” and “Building Blocks” and aim to cut costs across the board.
In addition to the cost cutting program, Suncorp’s new banking platform, named Ignite, is on track to be completed in June 2016. “This will reduce Suncorp Bank’s cost-to-income ratio from the current rate of around 53 per cent to under 50 per cent in the 2017 financial year. It will also deliver a superior service to Suncorp Bank customers,” the report said. Shares of SUN fell in the morning on Wednesday, but are flat around 1:32pm. SUN has fallen 0.15 per cent in the last 12 months and 4.69 per cent so far this year.
Author: Simon Herrmann
May 27, 2015
Simon is a financial analyst at independent research firm Wise-owl who wants to change the world by disrupting the cliché approach to investment decision making with convergent thinking. Wise-owl’s goal is plain and simple: Find the best opportunities for our members by following a proven methodology and to create long-term value through high-quality advice, innovation, technology and education. We combine industry experience and the agile mentality of a start-up. Wise-owl is the future of stock market investing.