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.
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.