Suncorp will focus on affordable insurance after bank divestment, says CEO Steve Johnston

The company will also be able to invest more in innovation and product redesign to make insurance more affordable for customers, particularly in areas of the country that are more exposed to natural disasters such as floods.

“The current conglomerate structure is sub-optimal to achieve this growth and success given the mid- to long-term macro trends both industries are facing [banking and insurance],” he said.

During its deliberations over the past year, Suncorp considered a number of hypothetical alternatives to the deal it eventually signed with ANZ. One was Suncorp’s merger with a bank similar in size to Bendigo and Adelaide Bank, which approached Suncorp in June and again in August last year to discuss a deal.

The bids were rejected by Suncorp’s board of directors, prompting complaints from CEO Marnie Baker and Chairwoman Jacqueline Hey. Baker recently warned that innovation would suffer if big banks were allowed to extend their dominance by buying their competitors.

However, Suncorp’s internal investigation concluded that a merger with Bendigo would pose significant execution and integration risks and would result in significant job losses, bank branch closures and a reduction in the number and types of products and services.

The merged bank would also struggle to create a brand image that would resonate, and there would be technological risks to integrating Bendigo’s seven core banking platforms with Suncorp’s two, Suncorp argues.

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Johnston also said smaller banks would face serious challenges in the near term as funding costs for wholesale customers are expected to increase due to rising interest rates, and climate change and geopolitical risks are increasingly disorganizing capital markets and creating volatility.

“With the more challenging banking outlook in Australia, significant attention and investment is required to successfully meet these challenges,” he said.

Suncorp would need to increase investment in digital and technology to allow banks to continue to meet the expectations of customers who are now accustomed to a range of non-traditional financial services and non-bank experiences such as B. “Buy now, pay later” providers.

“Suncorp Bank’s technology platforms, while robust and upgradeable for today’s business needs, will need a significant modernization over the next decade to be future-ready or market-leading,” he said.

The ANZ-Suncorp deal is emerging as a key test for the ACCC, which approved previous large-scale bank mergers, including Westpac’s purchase of St. George, amid the global financial crisis.

Opponents of the deal include the leading consumer group, the Consumers Federation of Australia, which has argued the merger would entrench the Big Four banks’ oligopoly and hurt competition.

It also met strong opposition from the financial sector union and a number of regional banks and smaller players, who questioned the impact on an already concentrated banking sector and the benefits to consumers.

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https://www.smh.com.au/business/banking-and-finance/suncorp-to-concentrate-on-affordable-insurance-after-divesting-bank-ceo-says-20230116-p5cctz.html?ref=rss&utm_medium=rss&utm_source=rss_business Suncorp will focus on affordable insurance after bank divestment, says CEO Steve Johnston

Brian Lowry

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