Bank of Queensland has extended and expanded its 10-year information technology and business processes outsourcing agreement with EDS (NYSE:EDS) to further support its continuing success in Queensland and interstate markets.
Bank of Queensland announced that it had extended the outsourcing agreement by two years due to the success of the contract to date, particularly in ongoing savings and the support of the bank's state-of-the-art IT system.
Bank of Queensland Managing Director David Liddy said the two-year extension would continue the Bank's annual savings and benefits from the outsource agreement, which are estimated to achieve $100 million in prospective cost savings over the original 10-year contract.
"In fact, we expect the annual benefits to exceed our original expectations by the end of the current contract," Mr. Liddy said. "The extension also gives the bank ongoing certainty and supports long-term planning processes."
The two-year extension is worth an additional AU$140 million in revenue to EDS on top of the original AU$480 million agreed when the contract was signed in March 2002. The contract will now run until 2014.
Now one of Australia's most technologically advanced banks, the Bank of Queensland, has embarked on an aggressive interstate expansion program, extending its branch network in Queensland, New South Wales and Victoria from 92 branches to 163 in less than three years.
Mr. Liddy said the bank's partnership with EDS was a key factor in the bank achieving its branch expansion program and also achieving cost and earnings growth targets.
"The local EDS team has been an effective and important strategic partner for us as we expanded in Queensland and now interstate," Mr. Liddy said. "They have delivered major improvements in sales and service efficiencies, which have resulted from an upgrade of the bank's information technology infrastructure and improved back office processes. The continuing support from EDS will be equally important as we work to open 100 interstate branches by August 2006, and we are confident in achieving increased efficiencies from our new banking platform."
Mr. Chris Mitchell, managing director of EDS Australia, said the fact that the Bank has both expanded and extended the original deal with EDS is evidence of the effectiveness of the local delivery team and the strong relationship with the Bank. "The fact that the bank has extended the original 10-year agreement after less than three years speaks volumes about the success of this relationship. The Bank of Queensland has IT and business support aligned to sustain its sales growth and service strategies, and EDS is very much a part of that vision."
Under the outsourcing agreement signed in 2002, EDS manages all IT infrastructure, applications and all business process services. The fulfillment of customer and sales service requests are managed by EDS across consumer and business banking from multiple channels.
Within the first three years of its agreement, EDS completed a major transformation of the Bank's core legacy systems and business processes to support the Bank's growth strategies.
"We now have a much improved line of sight of our costs, service changes and customers than before," said Jennifer Heffernan, the Bank's chief operations officer. "This is positively impacting sales and customer service."
Mr. Mitchell sees EDS' role as a support function to the Bank's dramatic growth in recent years. "EDS has replaced the Bank's entire core banking system, including back end, teller, customer relationship management, workflow and origination systems. It has also refreshed and upgraded its IT infrastructure, modernized its ATM fleet, rolled out Internet banking and re-engineered the Bank's back office operations. By outsourcing to EDS, the Bank is able to focus on developing its business and improving customer service," Mr. Mitchell said.