Westpac targets zero St George customer loss
Westpac chief transformation officer Brad Cooper, who is running the 130-strong St George integration team, said yesterday the bank could beat its base case assumption of four per cent St George customer attrition. Speaking at a merger briefing, Cooper said the initial integration model assumed a four per cent customer attrition that would result in revenue loss of $150 million in the 2009 financial year, $160 million in 2010 and $175 million in 2011.But 17 days after the completion of the merger Cooper said the group was targeting no customer loss.Cooper's team spent the past few months breaking the merged group up into 27 segments, assessing the attrition risk for each segment, devising mitigation strategies and customer communications strategies. Those strategies have been implemented and Cooper has already got the results of a first round of mystery shopping to see how things are going. Cooper said: "We have been happy with the results. Staff are delivering the right messages, the feedback has been positive and in the 11 St George segments we are above our attrition base case. "In November we got better retention in those segments than we averaged over the previous 12 months."Those "messages" were about Westpac's commitment to have no net reduction in branch numbers and to retain the flavour of each brand. The business opportunity is to introduce St George customers to the wider product set that is available through Westpac and BT.St George has higher retail and business customer satisfaction scores but Westpac sells more product per customer. In retail Westpac sells 2.8 products per customer, while St George sells 2.3 per customer. Cooper said: "The opportunity is for St George to use a broader product set, particularly in wealth management and insurance."Keeping the customers happy is one of Cooper's goals. The other is finding cost savings. Already the group has cut $52 million of costs (for the 2009 year) by reducing the executive headcount.Group executive numbers have gone from nine for Westpac and nine for St George to 12 for the merged group. General manager numbers have gone from 74 at Westpac and 70 at St George to 87 for the group. And general manager direct reports have gone from 451 at Westpac and 338 at St George to 434 for the group.A further $50 million will be saved by more efficient supply management and cutting out duplication.Cooper expects to get cost synergies to $400 million by year three by reducing supplier pricing and saving on accommodation and office equipment costs.Integration costs are estimated to be $700 million over four years, with the bulk of that (61 per cent) to be spent in the current financial year. Almost half will be spent on IT, systems and operations.The only structural change that was revealed at yesterday's briefing was a reallocation of Westpac business banking responsibilities. Premium banking, which deals with customers whose turnover is more than $50 million a year, will move from the personal and business banking division to Westpac Institutional Bank.In the final