Data collection activities have resulted in an increase in IT costs by $6 million for the Bank of Queensland (BOQ).
The bank said those activities addressed compliance requirements and new technology services resulting from its technology transformation programs.
IT expenses increased by 5 per cent, growing from $119 million in FY18 to $125 million in FY19.
Data processing expenses increased by $9 million driven by new technology services associated with the bank’s transformation programs, along with consultancy costs for data collection to support compliance activity. This was offset by a $3 million reduction in amortisation as a result of accelerated amortisation recognised in FY18.
Overall, operating expenses saw a $14 million increase to $242 million due to increased technology services resulting from the BOQ's transformation program and rising compliance and employee costs associated with managing the growing portfolio.
In FY18 the bank detailed a transformation program to improve technology platforms, meet new regulatory and compliance requirements and deliver digital offerings that improved customer experience, supported by an increase in capitalised investment.
"This contributed to an increase in IT expenses in FY19 and will lead to a higher level of amortisation in future periods as new functionality is deployed," BOQ said today in its full year results. "Opportunities to improve efficiency continue to be explored to minimise the impact of these expense headwinds."
The bank is also planning further investments to improve digital experience including Internet upgrades and mobile banking platforms.
Retiring chairman Roger Davis said that the modernisation of the bank's technology infrastructure, which includes shifting its data centres to a cloud-based environment, has progressed considerably.
"This will deliver benefits in the future as we have better capacity to scale up, reduce cost, implement change and partner with external providers to deliver better solutions for our customers," Davis told shareholders.
"We are also on track to rollout a more contemporary mobile banking offering to our customers in 2020. These are critical investments that will support our transformation and future aspirations," he added.
For the 12 months ended 31 August the bank reported statutory net profit after tax of $298 million, an 11 per cent drop from the previous year's $336 million. The highest statutory NPAT the bank has experienced in the last five years was in 2017 when it reached $352 million.
"2019 has been a year of significant change for the banking industry and for BOQ. As we reported at our first half results, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) will have long lasting effects on the Australian financial services landscape," Davis said
"We have already started to see the impact of higher costs as a result of the increase in expectations from regulators and the community. Meanwhile, the sector has also faced challenges of an uncertain outlook for housing prices and credit growth and the lower for longer interest rate environment, including the recent move to a record low cash rate of 0.75 per cent."