AMP ready to be 'Facebook for advice' as it delivers AU$848m FY17 profit

Cybersecurity, digital transformation, market competition, and the changing needs of the customer is the focus for AMP as it delivers AU$848 million in after-tax profit for FY17.
Written by Asha Barbaschow, Contributor

Australia and New Zealand-based financial services company AMP has delivered its financial results for 2017, reporting AU$848 million in after-tax profit -- a AU$1.19 billion swing from FY16's AU$344 million loss.

During the year ending December 31, 2017, AMP formalised a partnership with US-based United Capital to help develop its new operating system, a new business model touted by AMP as one that will deliver a "world-class client experience".

The digital deal with the US giant was last month labelled by analysts at Morgan Stanley as having the potential to see the company become "Facebook for advice" and create a new revenue stream for the Australian-listed company.

AMP already launched its "goals modelling engine", which forms part of its advice strategy "Goals 360". Its AMP advice practices had access in December, with all AMP licensees set to start using it by 2019, the company said.

"The advice engine could be a platform that is accessible by anyone in the market and effectively white labelled by anyone as a compliant digital solution," Daniel Toohey, an analyst at Morgan Stanley, is quoted by AMP as saying.

"The opportunity for AMP is to get customers and advisers entangled in the web of digital solutions to become the Facebook for advice. If it can capture the network's benefits that builds scale and barriers to entry. No one else is going to invest north of AU$100 million into advice -- the banks aren't."

In handing down its results on Thursday, AMP told shareholders it has programs in place for when it finds itself faced with the threat from startups and other innovative market entrants, as it continues its digital and cultural "change programs".

AMP said that given the nature of the business environment it operates in, the company continues to face challenges that could have an adverse impact on the delivery of its strategy, such as challenges stemming from competitors and the customer; cybersecurity; organisation restructuring; regulation; and business, employee, and partner conduct.

"Our strategy is set based on existing and expected business environmental factors including business cycle, technology, customer preferences, and competitive landscape," the company wrote in a statement issued to the ASX Thursday.

"AMP has programs in place aimed at anticipating and responding to threats and opportunities that arise from changing customer preferences and competitor strategies and capabilities."

During 2017, AMP aimed to create an "omni-channel" experience, which included new digital and direct channels.

Where cybersecurity is concerned, AMP said it recognises that "cyber risk" will continue to be a threat in a "rapidly changing technological environment" and that the magnitude and costs of cybercrime vary depending on the nature of the attack.

"AMP is committed to investing in enhancing our cybersecurity network and we have several detective, preventative, and responsive controls to protect our assets and networks," the company said. "While we are committed to enhancing our cybersecurity network, we recognise it is inevitable that cyber attacks will occur.

"In assessing and mitigating cybercrime, we regularly consider vulnerabilities and potential ways to mitigate failures of people, processes, and technology."

With digital transformation underway, AMP said it has invested heavily into developing new approaches, models, and ways of working to drive efficiency.

"We recognise that failure to appropriately manage the implementation of these changes can cause disruption to AMP's business operations," AMP wrote. "To manage this, AMP has dedicated resources with appropriate skills and expertise who establish change programs and manage the transition."

Further to this, AMP said it is focusing on ensuring the right culture is embedded into its everyday practices.


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