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Accelerating digitalisation

30 September 2024

Te kōkiritanga o te whakamatihikotanga

Heartland Bank made considerable progress in FY2024 to remove friction for customers through digitalisation, while creating the opportunity for scale and increased efficiency. In particular, the upgrade of Heartland Bank’s core banking system in New Zealand enabled the acceleration of Heartland’s digitalisation programme – the benefits of which are expected to contribute towards achieving Heartland’s ambition of an underlying CTI ratio of less than 35% by the end of FY2028.

A PLATFORM FOR FUTURE GROWTH AND STABILITY

In November 2023, Heartland Bank successfully upgraded its core banking system. The upgrade was a significant programme of work and investment which began in the financial year ended 30 June 2021 (FY2021).

The multi-year programme included a replacement of Heartland Bank’s internet banking platform to deliver improved functionality, stability and easier integration with supporting systems and third-party platforms. This has increased Heartland Bank’s opportunity for future innovation and improved efficiencies.

With cyber threats and events on the rise globally, data security is critical and was a key part of this change programme. The new internet banking platform now provides a foundation for further customer security feature enhancements into the future.

ACCELERATING THE DIGITALISATION PROGRAMME

Since the core banking system upgrade, Heartland Bank has accelerated its digitalisation programme of work. Several features have since been released to Heartland Bank’s digital platforms (the Heartland Mobile App and Heartland Digital). These were focused on enabling increased customer self-service for many of the reasons for customer inbound calls, and further enhancing customer security.

New features released since the upgrade provide customers with the ability to:

  • log in with multi-factor authentication for improved security when prompted
  • reset their own password directly from the app or Heartland Digital
  • view the interest rates for their savings accounts
  • cancel future dated payments
  • request loan overpayments be either refunded or applied to their loan
  • generate and download settlement quotes for Motor Finance loans
  • process transactions on multiple signatory accounts.

In addition, customer letters and statements are now available online (from the Heartland Mobile App and Heartland Digital) as the primary method of distribution – this is expected to deliver substantial cost benefit through the reduction of postage.

The impact of Heartland’s increased digitalisation and automation activity is expected to be realised through FY2025. Already, digitalisation combined with employee training and customer awareness campaigns to increase adoption contributed to a 6% reduction in Retail calls and a 9% reduction in customer service calls in FY2024 compared with FY2023.

LOOKING FORWARD

Ongoing digitalisation and automation efficiencies are critical to Heartland Bank’s ability to achieve its FY2028 underlying CTI ratio ambition. In FY2025, cost savings are expected to be delivered by aiming to uplift mobile app customer usage to 60% and reducing basic inbound customer service calls by 35%. To support this ambition, Heartland is working to digitalise over 50% of its basic banking functions, enabling customers to self-serve through online channels, and automate 35% of collections and operations processes. Eligible customers will also have the flexibility to self-manage certain Motor Finance loan repayments from October 2024.

Through digitalisation and changing the way it does things, Heartland Bank intends to become the lowest cost provider in the areas in which it operates. Ultimately, this is intended to increase Heartland Bank’s ability to provide competitive banking products, grow at scale and deliver enhanced value for customers and Heartland’s shareholders.