During the bank’s full year results announcement today, which chief executive Ian Narev characterised as a “predictable” $7.1 billion profit, he repeatedly stressed the productivity benefits of the new core banking real time platform. And in the most tangible demonstration he claimed that the new platform was a key element in CBA’s ability to win 38 competitive new business tenders in its institutional banking division, compared to a more usual run rate of 5-6 new pieces of business per year.
Overall Mr Narev said that; “We are starting to see the benefits of core banking show up in the business,” adding that new technology was reshaping the bank’s cost to income ratios as originally intended. While the retail bank recorded 3 per cent growth during the year, expenses rose by a slower 2 percent. In the business bank 4 per cent growth was achieved while expenses rose just 1 per cent.
At a presentation in Sydney which was also attended by the bank’s chief information officer Michael Harte, Mr Narev said “We have kept expenses well controlled and will continue to invest in the future technology story…this has been a very positive year in the ongoing progress of core.” All business and retail accounts have now been moved across to the new real time core platform developed by the bank in association with SAP.
Although the core banking programme is scheduled to be completed by the end of the year, during the last 12 months 29 per cent of the bank’s $1.3 billion overall investment - was spent on the core system.
The financial results also reveal that the bank’s desktop computing costs fell this year – from $120 million to $105 million - $7 million less than the bank spent on postage for the year.
The value of software on its books rose considerably however from $2.1 billion to $2.5 billion. After amortisation and impairment that dropped to $1.7 billion.