Suncorp executive Pip Marlow has acknowledged starting an online portal from scratch to sell financial products offered by fintech partners has not been easy, but says the marketplace strategy is on track and meeting internal targets.
“I would definitely say it was harder than we thought. We didn’t have a deep history or DNA of doing this so the degree of difficulty was harder, but I feel like really great progress has been made,” she said.
The former Microsoft Australia CEO has the task of delivering a new vision for the bancassurer that is focused on removing silos between the banking and insurance arms and the brands within them.
The strategy includes rebranding, refreshed store fitouts, an awareness campaign in the southern states and the project’s linchpin – the creation of a customer marketplace where Suncorp will showcase partnerships with fintech companies with offers for its customers.
Ms Marlow said she was proud of what she and the team had delivered in a short time. The decision to pursue a partnership model required a shift in mindset that didn’t come naturally to many financial institutions.
“The starting place for a large bank and assurance company is that we are not as used to that,” she said. “Banks and insurance companies are used to manufacturing and distributing their own product and they are fantastic at it and they are doing a great job.”
The customer marketplace was announced by CEO Michael Cameron in 2016 as part of an overarching One Suncorp strategy. The bank announced it would make an additional $100 million investment in the strategy in August and appointed Ms Marlow as customer marketplace CEO in October.
Mr Cameron responded to questions about the accelerated investment by saying the company had only a limited time to execute.
The market reacted poorly to the additional investment with the stock falling 13 per cent in the months that followed. The share price has recovered to reach a fresh 52-week high of $15.06 in anticipation of full-year results to be announced next week.
Investors and analysts alike have been critical of the strategy.
Airlie Funds Management portfolio manager Matt Williams was bullish about Suncorp’s prospects last week during an investor roadshow revealing it was among the fund’s top five active positions.
Mr William’s positive outlook on the company is predicated on the successful sale of its life insurance business. Suncorp began to explore a dual-track process of evaluating its options early in 2017 but he remains wary of “execution risk” as the bank rushes to deliver the iTunes of financial services.
The customer marketplace will look to deliver services to customers across the mobility, home, health and wealth sectors.
Among the partners it has signed up are the Spanish start-up Traity’s Trustbond product, which allows renters to pay a premium instead of a traditional deposit, and car buying and finance specialist Georgie.
Ms Marlow said the process for signing up new partners had been a challenge. There was no one-size-fits-all approach to partnering but the foundations had been laid for many more.
“There are lots of different types of partners,” Ms Marlow said. “We learned early on that to bespoke integrate a partner is really expensive.
“The capability we are building now is what those partnership models look like, how do you recruit them, how do you engage them, what are the different commercial models and how do you help them be successful because you actually have to make sure they are successful?”
Suncorp has forecast a cash return on equity of 10 per cent for the full-year results to be presented next Thursday. Analysts such as Morgan Stanley’s Daniel Toohey forecast the business will fall $100 million short of its target.
Mr Toohey views the sale of the life business as more of a backstop than a bonus. After raising his 12-month share price target from $13 to $14 he sees 6 per cent downside from current levels of $15.
After making the pivot from technology to banking, Ms Marlow said sometimes the noble purpose of banking was obscured and it was disappointing when banking’s contribution to the community could be lost in the noise.
“Don’t forget the good stuff organisations like ours do, such as help start your business, get your first home and protect the things you care about. Those stories can get lost, but that’s the reason you get out of bed.”
Ms Marlow said it was challenging to confront the examples of misconduct and conduct falling below community standards being exposed by the Hayne royal commission but that “any review by the commission that ensures we stick to our purpose, that’s a good thing”.
She said banks and financial services companies needed to continually invest in their assets including people and systems. Those who cut corners and were not delivering on their promises would see that aspect of their business atrophy and “that’s a risk to any business”.