New AMP chief spends $1bn on tech-led rescuestrategy

Demands silo demolition for 'horizontal' business after chalkingup $2.3bn loss.

Beleaguered financial services giant AMP hastapped the market for a $650 million capital raising to help it restructure thebusiness into a customer-centric and technology-led financial servicesprovider, including a core banking system lift, under a major strategic shift on the back of a $2.3 billion loss for the second half.

The head and shoulders of the highly anticipatednew strategy from AMP’s new chief executive Francesco De Ferrari is a $1billion dollar business transformation project that aims to unify its previously discretebusiness units into a super, investment and retail banking one-stop shop.

The transformation will be underpinned byanother major tech revamp that includes a restart for the previously paused new core banking system, “digitally enabled†wealth management products that are almost certain to incorporate robotic advice, costed at $350 million to $450 million “investing in growth†fund pool.

At the same time, AMP will sink another $350million to $450 million into a cost improvement project to extract around $300million a year in expenses by rationalising its various tech stacks, throwing more tech at operational efficiency and simplifying and improving processes.

The big rebuild will take around three yearsand will “pivot†the business to a ‘horizontal’ structure rather than a seriesof siloed verticals, some of which like AMP’s life insurance business are beingoffloaded.

The future state of AMP as painted by DeFerrari will be a single customer information environment where they canexecute day-to-day banking and manage their investments that traverse ‘whole-of-wealth’- starting with peoples’ first job, access to debt (mortgages), growing assetsand protecting investments.

De Ferrari said while the whole-of-wealthinstitutional business was well accepted overseas, it was largely new toAustralia. He also talked up the potential to take on major retail banks, manyof which are now largely exiting financial advice and insurance after copping abeating at the Royal Commission.

“We are fundamentally going to change thebusiness model,†De Ferrari said. “We have a huge opportunity in retailbanking,†adding that in wealth AMP needed best of breed products delivered tocustomers through technology.

In a sharp contrast to the technology woesof bancassurer Suncorp, De Ferrari conspicuously defended AMP’s currenttechnology shop, praising its efforts around cloud and digital delivery.

“AMP starts from a strong technologyfoundations,†De Ferrari said, then noting that the problem was that goodachievements were stuck in “vertical silos†across the business, afragmentation effect that had helped chalk up a wincing cost-to-income ratio ofaround 60 percent in wealth and capital.

De Ferrari insisted that digital delivery,customer service and automation across areas like compliance needed to go rightacross the organisation.

“[AMP] has to be much more of a data andtechnology led business,†De Ferrari said, saying these were part of “buildingthe new AMPâ€.

“These are big missions."