National Australia Bank's acquisition of the Australian operations of wealth management giant Aviva will see the integration of back-end information technology in the hope of achieving cost savings.
Aviva will deliver important service and technology capabilities, which we can utilise across our broader business
Steve Tucker NAB Group Executive Wealth
According to the bank's transaction summary, technology integration will be a focus for the marrying of the two companies. The total integration cost is estimated at $125 million over three years, but a spokesperson for the bank was unable to break down costs for the technology integration. At this point, the bank has identified around $70 million per annum in synergies for the purchase.
Although NAB planned to join Aviva's back-end with its own and consolidate support functions in a phased approach, it wanted to preserve the acquisition's front-end capabilities. The bank had hoped not only to increase the scale of its wealth management arm MLC, but to also increase its technological capability via the acquisition. "Aviva will deliver important service and technology capabilities, which we can utilise across our broader business for the benefit of financial advisors and their clients," NAB group executive for Wealth Australia Steve Tucker said in a statement.
In particular, NAB believed that those advisors dealing with MLC would achieve faster turnaround times on their business with the company via Aviva's Riskfirst online insurance underwriting engine and its n-link online advisor product.
Riskfirst is a signature free online underwriting platform, which, according to Aviva, allows advisers to complete an application form in less than 30 minutes. N-link connects advisor offices to Aviva's products and administrative system, providing tools to manage clients, conduct financial planning and online transactions as well as reporting.
NAB believed that it could save money by avoiding investment spend to enhance its capabilities.
The bank's purchase of Aviva's Australian operations is subject to approval by the Australian Competition and Consumer Commission and is expected to be completed during the fourth quarter of this year.
The planned integration comes at a time when the bank already has some large projects on its plate, including the revamping of its core banking system. The first phase of that project, a $30 million spend on its direct bank UBank, is currently drawing to a close. The bank has not yet outlined its plans for the next phase, although it commissioned a review from Ernst & Young as an "interim checkpoint" on the project.