Bank of Queensland Overhauls ME Bank Business

Bank of Queensland (BOQ) has been open about its intentions to integrate the back-end systems of its customer-facing brands. This week, new details are emerging about a significant overhaul of the ME Bank business.

ME Bank Discontinues Credit Card Operation

ME Bank has informed mortgage brokers of a significant alteration to its product mix. As of October 2, 2023, the bank will cease to accept new credit card applications. The move essentially ends its award-winning credit card operation. Existing holders of ME-issued credit cards will continue to receive service from the bank, but the duration of this service remains undetermined.

BOQ and Credit Card Operations

BOQ previously withdrew from the credit card-issuing market, establishing an outsourcing agreement with Citi, which acted as the funder and legal issuer of its house-branded cards. Speculation now suggests that ME’s card operation may be outsourced to National Australia Bank, the current owner of the Citi cards business. This could result in significant alterations to the features and pricing of ME’s award-winning low-rate card.

ME Bank’s Credit Card Reputation

Over the past decade, ME has developed a reputation as a leading innovator in the credit card market. This reputation originated with the launch of the Frank card in May 2015. The card, which carries no annual fee, has attracted consumers looking for a low-cost credit tool. Despite the card’s popularity, the business appears to have been operating at a loss. This has led to the decision to close the business, as BOQ’s senior management could not find a feasible way to make it profitable.

BOQ’s Acquisition of ME Bank

When BOQ assumed legal ownership of ME Bank in July 2021, the ME credit card book had total receivables of around A$130 million. This made it the ninth largest credit card issuer in the country. BOQ is currently working to simplify ME as a digital business and to integrate the subsidiary’s core banking platform with its own system. This has proven to be a time-consuming and expensive process.

In a recent filing to the ASX, BOQ revealed that it is preparing for further write-downs on the carrying value of the ME business as it aims to speed up the digital transformation of the acquired asset. BOQ’s chief executive, Patrick Allaway, will unveil the group’s full-year results on October 11.