Suncorp drops tech spend to build future momentum

Suncorp expects to continue delivering digital-first customer experiences and other strategic initiatives despite paring back its technology spend in the last six months of 2021.

Banking operation expenses of the Queensland-based business grew by 1.1 percent to $366 million in the half-year period.

This would have been greater, but Suncorp reduced its spend on technology, and on new branch improvements.

Suncorp laid out 12 initiatives and detailed plans in May last year to sharpen business improvements and drive growth. These included multiple digital and capability investments.

Suncorp Group CEO Steve Johnston told investors during an analyst call that the company is "making good progress against those 12 key priorities.”

“Across the business, our priorities are simple and clear," Johnston said.

"We are focused on executing these 12 initiatives which, as you know are the cornerstones of our FY23 aspirations.”

In its home insurance portfolio, Johnston said digital sales grew by 14 percent in the past year “and now account for 38 percent of all sales and service transactions.”

“We are well on our way to our long term target of 70 percent digital [and] 30 percent voice in sales and service,” Johnston said.

Digital engagement in Suncorp's banking operation continued to rise with “digital account openings increasing by more than 20 percent.”

“We have rolled out customer accessibility features such as translating and interpreting services and Braille functionality at our ATMs as we optimise our distribution channels," Johnston said.

“Growth in everyday banking has continued, up 12.8 percent in the half, whilst we continue to increase flexibility for our customers with the launch of our PayLater offering.”

PayLater launched in September last year as the bank's buy now, pay later offering, making it the second bank after CBA to offer alternative payment options for customers.

CAPE rollout

Johnston said CAPE, Suncorp's new pricing engine that replaces its existing GIPE engine, was rolled out across the mass brands in its home portfolio in the first half.

“We are making good progress with the rollout of our new pricing engine," he said.

Johnston said the focus of the program will now be on the company's motor insurance mass brands.

“We have also introduced a number of innovative risk selection enhancements, including geospacial mapping, and are rolling out modern automated broking platforms across commercial insurance," he said.

Johnston added motor and home claims digital lodgement increased from 21 percent and 18 percent to 41 percent and 36 percent over the half.

“Digital lodgement at 50 percent in hazard claims represents a doubling on the prior year, significantly improving customer experience, speeding up the repair process and bringing down the ultimate cost of hazard claims," he said.

Suncorp reported a profit after tax of $388 million, down 20.8 percent from the previous year and cash earnings of $361 million, which decreased by 29.1 percent.

The group noted the drop stemmed from increased claims due to hazardous weather events and lower investment returns.